Volkswagen aims to double sales of electric cars in China this year after missing targets

BEIJING (Reuters) – Volkswagen AG (VOWG_p.DE) said it will likely double sales of its battery electric cars in China this year and aims for better performance, but the automaker could be bogged down by a shortage of semiconductors.

The ID series, produced by Volkswagen in its Chinese joint ventures with SAIC Motor (600104.SS) and the FAW Group, is the backbone of electric vehicle ambitions in China, the world’s largest auto market.

The German automaker sold 70,625 of its knowledge electric vehicles in China last year, missing its target of selling 80,000 to 100,000 vehicles, with production also affected by the regional COVID-19 outbreak as well as issues with the chip.

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Stefan Wallenstein, president of Volkswagen in China, told a press conference in Beijing that the automaker still wanted to double its original plan but that goal “is not currently secured by the semiconductor supply we’re currently seeing”.

He added, however, that it was “very positive that we will see a doubling of actual sales”.

Wallenstein said the Volkswagen Group, which owns other brands besides its own such as Audi, Lamborghini and Porsche, sold 3.3 million vehicles in China last year, down 14%.

Volkswagen Video is seen during the launch event in Shanghai, China, October 21, 2016. REUTERS/Ali Song

The company aims to increase that number by about 15%, or nearly 500,000 units, this year, although he said that also depends on the state of the chip supply.

A shortage of chips, used in everything from brake sensors to power steering to entertainment systems, has caused automakers around the world to reduce or suspend production, driving up prices for new and used cars amid strong consumer demand.

While the electric car market in China is experiencing very strong growth, most foreign automakers have lagged behind their Chinese counterparts in designing attractive smart cars.

Chinese brands now dominate the market, led by BYD (002594.SZ) and Wuling – part of the GM group but a domestic brand. While Tesla ranks third, it is the only foreign brand among the top 10.

“You don’t see Volkswagen. Players like Volkswagen, General Motors (GM.N) and Toyota (7203.T) have fallen far behind in the smart electric car race in China,” said Bill Russo, president of Automobility in Shanghai.

About 15% of all passenger cars purchased in China last year through November were either battery electric cars or hybrid electric cars, according to Russo. In November alone, electric vehicle sales accounted for 21% of all passenger vehicle sales in China.

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(Reporting by Norihiko Shiroso) by Brenda Goh. Editing by Edwina Gibbs

Our Standards: Thomson Reuters Trust Principles.

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