Volkswagen is focusing on China. Technologies developed in Hefei will first go to... South America

In the article:

Volkswagen is changing its previous “For China, in China” strategy

Technologies developed in China will be used in vehicles for other markets

Electrification, software, and autonomous driving systems are the new pillars of the brand’s development

Not just a factory, but an innovation center

Volkswagen is making a shift

For years, European manufacturers viewed China primarily as a huge market. The situation is now completely different. It is there that solutions are being created that increasingly shape the direction of the entire automotive industry. Volkswagen has decided to leverage this potential outside of China as well.

According to Reuters, the Wolfsburg-based company plans to introduce technologies developed in China to foreign markets, including South America and South Africa. A key role will be played by the Compact Main Platform developed in Hefei, along with the China Electronic Architecture, both of which are being developed in collaboration with Chinese partners. The first models using these solutions are expected to appear in South America by the end of this decade.

Note that this represents a clear shift from the company’s previous strategy known as “In China, for China,” which aimed to develop products and technologies primarily for local consumers. Now, Chinese expertise is set to become part of Volkswagen’s global portfolio.

Oliver Blume: China is a driver of innovation

Volkswagen Group Chairman Oliver Blume leaves no doubt about the importance of the Chinese market to the group’s future. “China is a key driver of innovation for the Volkswagen Group, and increasingly also a hub for products and technologies for our global markets,” the group’s chief said in a statement cited by Reuters. “We call it: in China and beyond.”

These words accurately reflect the direction of changes within the German group. Volkswagen aims not only to sell cars in China but also to export technological solutions from there to other regions of the world.

A response to the growing strength of Chinese manufacturers

This decision is not arbitrary. Volkswagen has been struggling with a declining share in the Chinese market for several years. Local manufacturers such as BYD and Geely have effectively leveraged their advantages in software, electric drives, and aggressive pricing strategies.

As a result, foreign manufacturers lost some of their previous competitive advantages. Reuters also notes that Volkswagen is undergoing its largest restructuring in 89 years, aiming to transform its Chinese operations from a former source of high profits into a cost-effective center for technology development and export.

At the same time, the company plans to increase exports of Volkswagen and Jetta models produced in China to countries in South America and Africa.

The new VEGA technology will debut in 2027

Along with the introduction of its new strategy, Volkswagen also announced the VEGA technology package. According to Reuters, it includes an 850 V architecture that enables very fast charging and preparation for third-level autonomous driving. The launch of this solution is scheduled for 2027.

This is another sign that for car manufacturers today, not only the vehicles themselves but also software and advanced electronic systems are becoming increasingly important.

Europe still has to wait

Although there are speculations about using Chinese technologies on the Old Continent as well, Volkswagen officially points to other expansion directions at present. Reuters reports that the company has identified Latin America, Africa, and Southeast Asia as the main markets for models developed in China. Europe and North America remain outside this plan for now.

As Frank Han, head of CARIAD China, noted, the choice of South America is not arbitrary. It is a market highly sensitive to costs, while at the same time increasingly dominated by Chinese manufacturers. Reuters emphasizes that implementing these technologies in Europe would be technically possible, but such a decision would require considering geopolitical factors as well.

Oskar Włostowski