German companies are intensifying their commitment to China’s rapidly expanding new energy vehicle (NEV) sector, seeking to capitalize on the vast market potential presented by the nation’s population of 1.4 billion.
This year has witnessed a remarkable surge in the production and sales of NEVs in China. Over the initial seven months, the country’s NEV production reached 4.59 million units, reflecting a substantial 40 percent year-on-year increase. Simultaneously, sales surged to 4.53 million units, marking a robust 41.7 percent rise compared to the previous year, according to data disclosed by the China Association of Automobile Manufacturers.
Hefei, the capital of China’s Anhui Province, stands as a hub for numerous NEV enterprises, including Volkswagen Anhui, NIO, and BYD. With over 500 associated industrial chain enterprises and an employee base of approximately 100,000 individuals, Hefei is rapidly solidifying its position as a pivotal NEV industrial cluster within China and the global landscape.
“Volkswagen Anhui represents Volkswagen Group’s inaugural majority-owned joint venture centered on all-electric vehicles in China. It stands as a vital cornerstone for the group’s electric mobility thrust and global decarbonization strategy,” affirmed Erwin Gabardi, CEO of Volkswagen Anhui.
Demonstrating their steadfast commitment, the German carmaker is in the midst of erecting a new NEV hub in Hefei, complete with a comprehensive value chain encompassing research and development, manufacturing, sales, and services. With an earmarked investment totaling 23.1 billion yuan (approximately 3.17 billion U.S. dollars), Volkswagen is capitalizing on the momentum of this ambitious project, aided by favorable governmental policies and enticing talent acquisition initiatives.
Gabardi further stated, “The government’s innovative approach and provision of preferential policies have propelled our project’s rapid advancement and fortified our workforce through attractive talent incentives.”
Teaming up with Hefei University and local authorities, Volkswagen is fostering a cadre of highly skilled NEV professionals. Established in 2021, Volkswagen College is dedicated to implanting the German dual education framework into Chinese vocational institutions and higher education establishments. This endeavor aims to cultivate a pool of NEV experts to fuel the industry’s sustained growth. The program’s initial cohort of “seed engineers” have successfully graduated and integrated into Volkswagen Anhui, contributing to NEV research and development.
Furthermore, Volkswagen Group recently inked an agreement to acquire a 4.99 percent stake in Chinese NEV startup Xpeng, with a transaction value of 700 million U.S. dollars. This strategic move accompanies joint efforts to co-create two NEV models specifically tailored for the Chinese market.
Recent exchanges underscore the burgeoning interest of German enterprises in Anhui. Christian Coates, President of Continental AG’s Tire Division, engaged in discussions regarding potential collaborations during a visit to Hefei, following Anhui officials’ visit to Continental AG’s headquarters in Hannover, Germany.
Both parties have concurred on seizing the NEV industry’s growth prospects, expediting the expansion of Continental AG’s tire factory in Hefei, and outlining future initiatives in fields such as automotive electronics and research and development. The company’s Hefei operations, inaugurated in 2011, have achieved an annual output of 12 million passenger car tires and 3 million bicycle tires, generating an output value of 6.34 billion yuan in 2022.
Volkswagen and Continental stand among the burgeoning contingent of German firms displaying keen interest in investing in Anhui. Organized by the China-Germany Friendship Association, a visit by renowned companies including Volkswagen, BMW, and Mercedes-Benz on August 18 aimed to foster collaboration in the NEV sector, vocational education, youth exchanges, and other spheres.
Shi Mingde, President of the China-Germany Friendship Association, underlined the organization’s role in catalyzing such partnerships, promoting synergies between German enterprises and Anhui in NEVs, vocational education, and intercultural exchanges.
As a globally recognized automobile manufacturing powerhouse, Germany stands to accrue substantial benefits from its cooperative endeavors with China, encompassing market access, technological innovation, and talent cultivation. This partnership is further underscored by the fact that China has held the position of Germany’s largest trading partner for seven consecutive years. Presently, over 5,000 German companies operate in China, while more than 2,500 Chinese companies are active in Germany, as highlighted by Silke Besser, General Manager of the German-Chinese Business Association.