The Volkswagen Group is consistently advancing its “In China, for China” strategy. The company is strengthening its successful 40-year partnership with SAIC Motor for the long term. In Shanghai, both companies signed an extension of their joint venture agreement until the year 2040. By extending the agreement, the partners are creating early planning security beyond 2030 in a very dynamic development phase of the Chinese automotive market. At the same time, Volkswagen and SAIC are accelerating the transformation of their joint venture company, SAIC VOLKSWAGEN, in the areas of product portfolio, production, and decarbonization. The shared goal of the partners is to achieve a leading market position for SAIC VOLKSWAGEN with the Volkswagen Passenger Cars and Audi brands in the era of intelligent, fully connected electric vehicles.
“Volkswagen and SAIC are pioneers of individual mobility in China. Together, we established one of the first international joint ventures in the region 40 years ago. Since its establishment, SAIC VOLKSWAGEN has earned the trust of more than 28 million customers. With the long-term contract extension, we underline the importance of this collaboration and the significance of the Chinese market for the Volkswagen Group. We are accelerating the transformation of SAIC VOLKSWAGEN in line with our ‘In China, for China’ strategy on all levels, bringing a new generation of electrified vehicles onto the road by 2026. This ensures that our partnership is economically and technologically future proof,” said Ralf Brandstätter, Member of the Board of Management of Volkswagen AG for China. “China is a driver of innovation for autonomous driving and electric mobility. With the new agreement, we are intensifying our integration into the Chinese ecosystem and consistently leveraging local innovation strength. This also creates a strategic competitive advantage for the Volkswagen Group worldwide.”
Wang Xiaoqiu, Chairman of SAIC Motor, said: “Electrification and the transformation of the car into an intelligent vehicle are the defining trends in the automotive industry. In view of the highly dynamic market, SAIC Motors, the first Chinese carmaker to sell more than one million vehicles in the electric segment and in overseas markets, is deepening and expanding its cooperation with Volkswagen. The focus for SAIC VOLKSWAGEN is on the development of new, intelligent electric vehicles in order to maintain an industry-leading position in the field of smart technologies. The decisive factors here are consistent customer orientation, quality management and the use of our own innovative strength. We will break new ground with ‘China Speed’. The aim of the joint venture is to achieve sustainable and steady sales growth and a leading market position. In this way, we are contributing to the further positive development of the Chinese and global automotive industry.”
The original joint venture agreement was valid until 2030. However, due to the multi-year planning cycles of new products and the associated investments, fundamental agreements are typically extended several years before their end date.
With the new agreement, both partners are now creating a strong and timely foundation for the successful development of SAIC VOLKSWAGEN beyond 2030. With this in mind, Volkswagen and SAIC have identified three key areas to accelerate the transformation of the SAIC VOLKSWAGEN joint venture with the Volkswagen Passenger Cars and Audi brands:
1. Expansion of product offensive with new e-models, range-extender variants, and plug-in hybrids
By 2030, SAIC VOLKSWAGEN will introduce a total of 18 new models to the market. In light of the dynamic market development, the joint venture partners are particularly focusing on an accelerated electrification strategy. This includes eight new electric models. As early as 2026, two electric vehicles based on the newly locally developed “Compact Main Platform” (CMP) – equipped with a state-of-the-art zonal electric architecture used for the first time across the Group – will be launched. Additionally, the still highly profitable internal combustion engine offering will be transitioned into the electric mobility world by 2026 with three plug-in hybrid models and, for the first time, two range-extender variants. This will rapidly further strengthen the company’s position in the fast-growing market for fully electric and partially electrified vehicles. At the same time, the new vehicles will be consistently tailored to customer needs as part of the “In China, for China” strategy. Of the 18 models that SAIC VOLKSWAGEN will introduce to the market by 2030, 15 vehicles are being developed exclusively for the Chinese market.
2. Gradual optimization of the production network with a focus on efficiency and productivity
Given the rapidly growing market demand for electric vehicles and increasing competitive pressure, the joint venture partners will also accelerate the transformation of SVW’s production network with a focus on cost-effectiveness and productivity. In this context, existing production capacity for internal combustion vehicles will be gradually reduced in the coming years. While many SVW sites are being, or have already been, converted to produce electric vehicles based on customer demand, alternative economic solutions will be examined in individual cases. This also applies to the joint venture site in Urumqi. Due to economic reasons, the site has now been sold by the joint venture as part of the realignment. The same applies to the test tracks in Turpan and Anting.
3. Consistent decarbonization initiatives with ambitious goals
As part of the extension of the joint venture agreement, both partners have agreed on ambitious decarbonization goals for sustainability. SAIC VOLKSWAGEN aims to reduce its CO2 emissions by 25 percent by 2030 compared to 2018 levels and is actively pushing forward its transformation towards carbon neutrality at the corporate level. Thereby, SAIC VOLKSWAGEN is following the Group’s objective of achieving carbon neutrality by 2050. This positions the company as a pioneer in decarbonization within the Chinese automotive industry.
SAIC and Volkswagen continue 40-year success story
Over the past four decades, the Volkswagen Group, together with its Chinese partner SAIC, has precisely aligned its strategy to meet the needs of Chinese customers. With the Santana, millions of customers were enabled to enter the world of individual mobility. Later, the first China-specific models like the Lavida were introduced, becoming multi-million-sellers and continuing to enjoy great success in the market today. Since 2007, ŠKODA models have also been produced by SAIC VOLKSWAGEN. The electrification strategy in China was launched as early as 2017. The ID.3 is currently one of the best-selling pure electric vehicles in the Chinese market and leads the segment of compact hatchbacks.
Group drives transformation with “In China, For China” strategy
As part of its “In China, for China” strategy, the Volkswagen Group is determined to drive forward its transformation in China. The Group is strengthening its local development skills in e-mobility, digitalization, and autonomous driving. This involves both enhanced collaboration with its Chinese partners and the consistent expansion of its own additional development capacities. A key role in this context is played by the new development and innovation center in Hefei, where around 3,000 developers are working on the next generation of fully connected intelligent electric vehicles. This also accelerates the Group’s decision-making and development processes in the region, contributing to a reduction in the development cycles of new products by 30 percent. This enables the company to respond more quickly to market-defining trends in China and to optimally leverage the market’s growth dynamics.
Over the next three years alone, the Group and its brands will bring 40 new models to the Chinese market, half of which will be electrified. By 2030, the Group will offer more than 30 electric models in China.
SOURCE: Volkswagen Group
