To face up to competition from Tesla and other Chinese automakers, Volkswagen has announced a major investment of 2.5 billion euros in its innovation center in Hefei. This strategic initiative is part of a frantic race to dominate the electric vehicle market in the world’s most populous country.
Volkswagen, the German automotive giant, announced on Thursday April 11th a massive 2.5 billion euro investment in its innovation center in Hefei, a city in eastern China, 450 kilometers from Shanghai.
The decision comes as German Chancellor Olaf Scholz began a three-day visit to the Middle Kingdom on Saturday April 13.
The automaker aims to increase its research and development capacity. It is also seeking to finance the development of two top-of-the-range C-segment car models, in collaboration with Chinese unicorn Xpeng, in whose capital it has acquired a 9% stake.
The Hefei center, already the largest outside Germany, will see its workforce grow from 1,200 to 3,000 by the end of 2024.
“This additional investment underlines our ambition to rapidly increase our local innovation strength,” said Ralf Brandstätter, Volkswagen’s boss for China.
Reducing time-to-market
In Hefei, the goal is ambitious: to reduce the time it takes to bring an electric vehicle to market by 30%. The center is resolutely focused on 100% intelligent and connected vehicles, with the ambition of developing its first electric platform entirely based in China within thirty-six months.
Volkswagen plans to use this platform to launch four new cars between 2026 and 2030, sold in a price range from €18,000 to €22,000.
To guarantee fully localized production, a 450,000-square-meter supplier park is being built, housing over a thousand software and hardware suppliers.
“In China, for China”
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Featured photo : © Volkswagen
