Volkswagen has revealed its plan to invest €2.5 billion ($2.7 billion) in expanding its operations in China to combat a decline in sales, primarily targeting local manufacturers. The investment will bolster its production and innovation hub in Hefei, Anhui province, emphasizing the company’s commitment to enhancing its local innovative capabilities. Volkswagen faces stiff competition in China, notably losing its top-selling status to domestic electric vehicle manufacturer BYD in 2023. As China dominates global electric car sales, Volkswagen aims to intensify competition by partnering with local players like Xpeng. Earlier this month, the European automaker had revealed surprisingly robust growth in its first-quarter sales of both combustion and electric vehicles in China, aided by price reductions. According to the Financial Times, Volkswagen reported that deliveries of electric vehicles grew year over year by 91 percent. Compared to 2023, deliveries to China rose by about 8 percent to 694,000 units in the first quarter of this year. “Volkswagen Group China’s e-offensive is taking effect,” Ralf Brandstätter, Volkswagen's China head told the Financial Times at the time. “In a market that continues to be characterized by an ongoing price war, we are able to record strong growth, especially with our pure battery vehicles.”
