Volkswagen can now build EVs in China, claiming it can cut costs by up to 50%

For the first time, Volkswagen can now fully develop new vehicles outside of Germany. Volkswagen claims it can cut development costs by up to 50% by building EVs in China.

Volkswagen will build EVs in China for export

As the saying goes, if you can’t beat them, join them. After opening its first Test Workshop in Hefei, China, on Tuesday, Volkswagen said for the first time that it can now develop and launch new vehicles outside of its home market.

Volkswagen’s “In China for China” strategy is gaining momentum. The new development center enables the company to develop, test, and locally manufacture intelligent connected vehicles.

The milestone “makes us even faster and more efficient,” CEO Oliver Blume said during the opening ceremony. Volkswagen claimed the new facility can slash development time by 30% while reducing costs by up to 50% by leveraging local tech and suppliers.

Advertisement – scroll for more content

The Volkswagen Group China Technology Company (VCTC) is the company’s most comprehensive R&D hub, explicitly dedicated to electric, intelligent, and connected vehicles.

By working with local tech companies and suppliers, VW aims to keep pace with China’s “market-defining trends,” such as autonomous driving, digitalization, digital cockpit functions, and advanced driver assistance systems (ADAS).

Volkswagen is launching the new China Electric Architecture (CEA), its first software-defined platform, with deliveries scheduled to begin within 18 months.

According to VW, its new software-defined vehicle development process can shorten the development cycle by 30%. By leveraging local development and suppliers in the early phases, the German auto giant claimed “the cost of a new car can be reduced by up to 50%” for specific projects.

“The new workshops give our engineering teams an entirely new level of integration,” Thomas Ulbrich, CTO of Volkswagen Group China, said, adding,” We can now run software, hardware, and full-vehicle validation processes in parallel, shorten decision loops, and bring innovations to maturity much faster.

Volkswagen’s hub spans 100,000 m² and includes over 100 labs for software-hardware testing, battery and powertrain validation, and complete platform verification.

At the Battery & Powertrain Integration Testing Center, VW engineers can test up to 500 battery systems every year. The tests cover all areas, including performance, lifetime, safety, and environmental robustness. They also test the E-Drive, thermal management, electronics, and battery cell components.

Volkswagen will use the new hub to develop and export vehicles to overseas markets, like the Middle East and Southeast Asia.

Electrek’s Take

Like most major OEMs, Volkswagen is turning to China to gain an advantage in overseas markets. The German auto giant has already partnered with XPeng and Rivian to use new tech, software, and platforms for its next-generation EVs.

Struggling to keep pace with Chinese EV makers like BYD, Volkswagen is betting on local integration to gain an advantage — or at least help even the playing field.

With sales sinking in China and North America, the German auto giant looks to turn things around with its next-gen EVs, promising more efficiency, advanced new features, and significantly lower costs.