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VW's China EV Bet Stumbles: Xpeng Cars Sell Poorly
20 Oct
Summary
- VW's Xpeng partnership yielded an SUV selling just 267 units monthly.
- Volkswagen's China profits dropped from 50% to 10% of group earnings.
- Local rivals like Xiaomi and Zeekr sold thousands more vehicles.
Volkswagen's ambitious partnership with EV maker Xpeng, aimed at accelerating product development for the Chinese market, has faced a rocky beginning. The inaugural model, the ID. UNYX 08 electric SUV, launched in April, has achieved minimal sales, averaging just 267 units per month by August. This figure falls far short of Volkswagen's initial projection of 3,622 monthly sales for the year.
The weak debut underscores Volkswagen's broader challenges in China, once its most profitable market. The automaker's share of group profits from China has plummeted from nearly 50% to approximately 10%, necessitating a significant restructuring. The ID. UNYX 08's struggles are attributed to its pricing, which is undercut by Chinese rivals offering superior technology and features, such as Xiaomi's YU7 and Zeekr's 7X.
Further complicating sales is Volkswagen's distribution strategy for the UNYX 08, which relied on a new, limited network under Volkswagen Anhui. This contrasts with its extensive existing dealership network, leading to low consumer awareness. Despite these setbacks, Volkswagen is proceeding with its next Xpeng collaboration, the UNYX 09 sedan, with aggressive sales targets.
This situation reflects a larger trend among foreign automakers in China, who are increasingly falling behind local brands in software and battery technology. Companies like BYD and Geely are dominating by rapidly launching software-rich EVs at lower price points. Volkswagen's past ventures in China, from batteries to autonomous driving, have also encountered difficulties, illustrating a persistent struggle to adapt to the fast-paced local market.
