Volkswagen vows to boost China sales of electric cars after slow start

Volkswagen’s head of China has said the group will recover from a tepid launch of its electric models in the world’s largest car market, after fierce competition resulted in a disappointing early sales.

The world’s second-largest automaker delivered a total of 1.84m cars in China in the first half of the year, a rise of 16.2 per cent over the same period last year and just below the 1.92m units for 2019. VW’s premium brands Audi and Porsche notched record sales during the period.

But the group’s ID series of electric vehicles has failed to replicate its success in Europe in China, marking a setback for the global automaker’s €35bn electrification strategy.

“China is by far the most competitive [electric car] market in the world,” meaning that a new model needs six to eight months to establish sales, said Stephan Wöllenstein, chief executive of the Volkswagen Group China.

He added that the group expected cumulative deliveries of about 80,000 to 100,000 units across all ID models by the end of the year.

VW’s two ID.4 sport utility vehicle models, which were launched in March as the centrepiece of the group’s electrification strategy in China, reached just over 2,900 deliveries in June.

While an improvement over April and May sales, the figure is far below that for top-selling models. Tesla’s Model 3 and Model Y deliveries were 16,515 and 11,623 respectively that month. 

Yale Zhang, founder of Shanghai-based consultancy Automotive Foresight, said the ID models had failed to match local consumer expectations for electric car models for them to be distinct from traditional vehicles and come with a range of smart features.

“They look like a traditional vehicle. That’s fine in Europe, but not in China, because there are so many competitors with new models, whether from local EV start-ups or a localised Tesla,” he said.

China’s total electric vehicle sales have soared in the first half of 2021, with 1.2m cars being delivered, about the same as in all of 2019. After years of hovering at about 5 per cent of total automobile sales, the segment now routinely accounts for more than a tenth of total monthly deliveries. 

The government has set a goal for electric vehicles to account for 20 per cent of new sales by 2025. Deutsche Bank analysts forecasted in a note this week that sales in China of battery-powered electric vehicles could double this year to more than 2m units.