According to a report by Reuters on October 28th, Volkswagen is promoting technology developed in China to markets in South America and South Africa. This German automaker hopes to enhance its global competitiveness by relying on China as an important innovation center.
Volkswagen announced on Wednesday that its research and development center in Hefei, a city in eastern China, has developed a compact vehicle platform (CMP) in collaboration with Chinese companies, as well as a Chinese electronic and electrical architecture (CEA). These technologies will be applied to next-generation models targeting markets in the “Global South”. The related technologies will be first introduced in the South American market by the end of this decade.
“In China, and beyond,” said Oliver Blume, Chief Executive Officer of Volkswagen Group. “China is a crucial innovation engine for the Volkswagen Group and is increasingly becoming our global market center for products and technology.”
This move marks a change in Volkswagen’s previous localization strategy of “In China, for China”. Currently, Volkswagen is working hard to boost sales in China and seeking to turn its technological cooperation with Chinese partners into commercial success.
This German automobile manufacturer is undergoing the largest restructuring in its 89-year history. It plans to transform its Chinese operations from being profit-driven engines of growth into cost-effective research and development centers as well as export bases. Volkswagen also announced that it plans to export more cars produced in China under the Volkswagen and Jetta brands to South America and Africa in the coming years.
General Motors, Hyundai Motor, Renault and other traditional automobile manufacturers are also increasingly adopting similar strategies, spreading the technologies developed in China to global markets in order to compete with Chinese competitors in the international market.
As part of technological advancements, Volkswagen has also released the VEGA technical solution. This solution supports fast charging at 850 volts and has the capability to support L3-level autonomous driving. It is planned to be launched in 2027.
Mass car sales will be launching their "retaking the lead" strategy in China's market as part of their effort to regain their position at the top.
Volkswagen has identified Southeast Asia, Latin America, and Africa as potential export destinations for its R&D-driven models in China. However, markets in Europe and North America are currently excluded.
Frank Han, CEO of CARIAD in China and part of Volkswagen, said that South America was chosen as the first overseas market for Volkswagen’s electronic and electrical architecture development because the region is price-sensitive, and Chinese automakers have already established a considerable market presence there. He added that from a technical perspective, deploying this technology in Europe is feasible, but any decisions will be made by Volkswagen’s German headquarters, which must consider various factors including geopolitical considerations.
