BYD is the first to change lanes to "stimulate" Volkswagen to stop production of fuel vehicles, electric vehicles, supply chain procurement tilted to the Chinese market.

BYD announced the suspension of production of fuel-fueled cars, knocking the nerves of Volkswagen Group thousands of miles away. Volkswagen Group CFO Arno Antlitz said on April 6 that Volkswagen would abandon dozens of internal combustion engine models and reduce overall car sales by 2030 to focus on producing higher-margin Audi, Porsche and other high-end cars.

Three days earlier, BYD pressed the "lane change" acceleration button to stop fuel vehicle production from March 2022, according to strategic development needs, becoming the first car company in the world to resolutely break with the traditional market.

"the latest statement of Volkswagen has nothing to do with BYD." Some industry insiders close to the Volkswagen Group said that there is already a plan to stop the production of fuel vehicles in Volkswagen's timetable, "but this cannot be achieved overnight. after all, Volkswagen is bigger than BYD, and it will also be gradual in an important market such as China."

Cut back on fuel-fueled cars, starting from Europe

In 2021, Volkswagen and Audi successively announced that they would stop the research and development of internal combustion engines. Among them, Audi will launch its last new fuel model in 2025, Audi will stop selling fuel models by 2030, and Volkswagen announced that it will stop selling fuel vehicles in the European market in 2035. In March of that year, Volkswagen Group said that by 2030, electric cars accounted for 70% of new cars sold by the Volkswagen brand in Europe, compared with 50% in China and the United States. In June, Volkswagen officials said that the Volkswagen brand will stop selling traditional fuel vehicles by 2035, when all pure electric vehicles will be produced and sold, but the plan is only aimed at the European market. China and the United States will postpone the suspension.

"over the next eight years, we will reduce our lineup of gasoline and diesel cars in Europe (including at least 100 models from several brands) by 60%." Antritz's latest statement, "update" part of the previous plan, "the company's goal is to pay more attention to new car quality and profit margins, rather than limited to sales growth and market share."

In the view of industry insiders, the continuing "core shortage" forces car companies to adopt a "priority mechanism" to focus their limited capacity on high-profit high-end models to ensure profit maximization, even if the subsequent supply chain returns to normal. This situation is also likely to continue. "for Volkswagen, focusing capacity on the production of high-end models such as Audi and Porsche is also more helpful to financial results."

Despite a 6% year-on-year drop in sales in 2021, Volkswagen's sales rose 12% year-on-year to 250.2 billion euros, according to the results. Among Volkswagen Group's high-end brands, Audi delivered a total of 1.6805 million vehicles, down 0.7% from a year earlier, while Porsche set a new delivery record, selling more than 300000 vehicles, with a sales growth rate of 10.9%. The VAG supercar division, made up of Lamborghini, Bentley and Bugatti, delivered 23100 new cars, up 23.6% from a year earlier.

Strengthening electric cars is essential to the Chinese market.

"as there will be fewer and fewer fuel models to choose from, electrification and high-end technology will inevitably lead to the loss of customers, and Volkswagen is likely to withdraw from the competition of the world's largest carmaker." The industry insiders believe that at present, more than 100 products are on sale in the Volkswagen Group, and its Skoda, Siat and other brands are highly similar to similar products of the Volkswagen brand. "this production reduction plan is aimed at all the brands it sells in Europe." it also shows that under the increasingly stringent emission regulations, Volkswagen's electrified models will gradually increase, such a change is imperative. "

According to data, Volkswagen delivered 452900 pure electric vehicles worldwide in 2021, an increase of 95.5 per cent over the same period last year. Among them, the 25 per cent share in Europe reached 310400, up 61.9 per cent from the same period last year and twice the share of fuel vehicles; in the United States, it ranked second in the pure electric vehicle market with a 7.5 per cent share, with sales of 37200 vehicles, up 200.2 per cent from the same period last year; and 92700 vehicles in China, an increase of 319.5 per cent. Previously, Volkswagen predicted that 25 per cent of its global sales would be pure electric vehicles by 2026, which currently account for only about 5 per cent of Volkswagen sales.

On April 2nd, Volkswagen Group disclosed that for the first time, Volkswagen Group has invited about 20 local technology companies to participate in its global procurement to provide hardware for its all-electric model based on the SSP platform (extensible system platform) and equipped with the CARIAD E3 2.0 software platform, which will be put into production in Europe and North America in 2025.

"We cannot disclose the names of these companies, but what we can confirm is that these invited companies are leading companies in various fields in China." Some Volkswagen Chinese insiders said.

According to Bei Mingjie, executive vice president and head of purchasing department of Volkswagen China, the bidding for hardware procurement around CARIAD E32.0 focuses on four key areas: digital interconnection, smart cockpit, autopilot and shared travel. "E32.0 is a unified and scalable software platform architecture developed by the group's software company CARIAD. In the future, it will be applicable to all Volkswagen brand models, while suppliers who meet the group's business needs and sustainable development requirements, its technical solutions are expected to be applied to the SSP-based models developed by the group in Europe and North America in 2025." Bei Mingjie said.