Volkswagen is accelerating its efforts to bolster its presence in the Chinese market, with significant shifts planned for vehicle architecture, software development and the introduction of a budget-friendly electric vehicle. According to an announcement by Volkswagen China CEO Ralf Brandstätter in the Handelsblatt, the company intends to substantially increase its in-house capabilities within the country.
A key component of this strategy is the development of a unified electronic architecture for all vehicle platforms in China, slated for implementation beginning in 2027. This new architecture – representing an enhanced version of the currently planned China Electronic Architecture (CEA) – will largely comprise locally developed software and hardware, transitioning away from the current partnership with electric vehicle startup Xpeng.
Furthermore, Volkswagen is preparing to launch an affordable electric vehicle specifically targeting the Chinese market. Scheduled for release under the Jetta brand beginning in 2026, this entry-level model is projected to retail for under €15,000 (approximately $16,000 USD). The project involves a collaborative effort with joint venture partner FAW and ongoing discussions are underway exploring the potential for additional models within this price bracket.
The move comes amidst increasing pressure on Volkswagen due to a recent decline in electric vehicle sales in China. Sales of electric vehicles in the country decreased by 34 percent in the first half of the year compared to the previous year, prompting the company to reassess its strategy and strengthen its local operations.