VW’s restart in China with Xpeng’s support appears to be struggling.
Volkswagen's restart in China using technology from its local partner Xpeng is progressing very poorly according to a news agency report. The company reportedly failed to sell even 10 percent of the expected volume for the first jointly developed model, the VW ID.UNYX 08. Additionally, it is said that Volkswagen once considered partnering with BYD or Leapmotor before finalizing the deal with Xpeng.
VW ID. UNYX 08
Image: VW
In July 2023, VW and Xpeng entered into a partnership that included Volkswagen taking a roughly 5 percent stake in the Chinese automaker. This year, in April, Volkswagen launched its first model on the Chinese market based on Xpeng’s technology—the ID. UNYX 08 electric SUV, which utilizes Xpeng’s Edward platform along with its cockpit systems, smart driving technologies, and AI chips. In September, the technically related ID. UNYX 09 electric sedan was introduced following suit. Soon after, Volkswagen is set to bring its first electric vehicles to China that are built on the jointly developed China Electronic Architecture (CEA).
A report by news agency Reuters shows that the VW ID. UNYX 08, launched as a hope for a new start in China, has so far turned out to be a failure. Data from consulting firm ThinkerCar indicates that an average of 267 units of the VW ID. UNYX 08 were sold each month between April and August. The report claims Volkswagen originally planned to sell 3,622 units per month for this year. In other words, in the first five months since its launch, sales of this electric SUV were a staggering 92.6 percent below the target, meeting it only by 7.4 percent.
According to insiders interviewed by Reuters, one reason for the weak sales performance is the incomplete distribution network. As a result, the car is not well-known enough. The VW ID. UNYX 08 is primarily sold through a new dealership network owned by Volkswagen Anhui, rather than through the more than 3,000 dealerships that VW operates in partnership with FAW and SAIC. Volkswagen states that the Anhui dealership network currently has only 166 outlets. In the future, the car is set to be available through more sales points via its long-term partner FAW.
The ID. UNYX 08 was last offered at a 17 percent discount.
Other issues with the model appear to lie in its specifications and pricing. When it launched in April, the VW ID. UNYX 08 was offered at prices starting from 229,900 yuan, which is equivalent to less than 29,000 euros. However, this price was apparently not competitive, as VW has been offering the model with a 17 percent discount for weeks, according to the news agency.
Chinese competitors in the same price range offer significantly more advanced features: The Xiaomi YU7, for example, comes equipped with a highly sophisticated sensor suite, while the Zeekr 7X provides much better fast-charging capabilities. According to ThinkerCar, Xiaomi sold nearly 57,000 units of the YU7 between April and August, Zeekr sold over 21,000 units of the 7X — in contrast, only about 1,300 units of the VW ID. UNYX 08 were sold. “Chinese consumers are asking: Why buy an expensive German car when they can get similar technology at a much lower cost?” says Pedro Pacheco, Vice President of Research at Gartner.
VW considered partnerships with BYD and Leapmotor
In addition to providing a look at the VW ID. UNYX 08, the Reuters report also offers a broader perspective on Volkswagen’s strategy in China, revealing previously unknown details: It appears that before forming its partnership with Xpeng in 2023, VW initially tried in 2022 to establish a collaboration with China’s largest electric vehicle manufacturer, BYD, in order to use its Dolphin platform for vehicles under Volkswagen’s Chinese subbrand, Jetta. Reuters was unable to determine why the deal ultimately failed. Additionally, it is said that VW also negotiated with Chinese manufacturer Leapmotor prior to the Xpeng deal, but Leapmotor chose to partner with Stellantis instead.
Volkswagen's business in China has declined sharply over the past few years. In the first half of 2026 alone, sales in China dropped by 25.9 percent to 973,000 vehicles across all powertrains. For electric cars, which are particularly important in China, sales fell even more by 47.9 percent to 30,900 units. As a countermeasure, VW has recently released updates and implemented significant price cuts for its older electric car models ID. UNYX 06 and 07, which are not based on Xpeng platforms.