Volkswagen Vows All-Out Fight Against Chinese Rivals, Chinese Companies Respond

Deep News
Sep 11

In the European electric vehicle market, as Chinese automakers continue their expansion, German automobile manufacturers are looking to launch a new wave of counterattacks.

According to the Financial Times on September 11, after announcing significant workforce and capacity cuts at German factories last year, Volkswagen executives stated at this week's Munich Motor Show that the group is ready to fight back against Chinese competitors. "We dominate in Europe and will defend this position by all means," said Thomas Schäfer, CEO of Volkswagen's passenger car brand.

Currently, Volkswagen is struggling to cope with declining market share in China and the rise of BYD Company Limited and other Chinese electric vehicle competitors. Schäfer believes that Volkswagen's new vehicle series is "highly competitive" and that Chinese automakers will face greater challenges when entering the European market.

Following the opening of this year's Munich Motor Show, Germany's three major automakers have made intensive statements, many of which concern China. Mercedes-Benz's Chief Technology Officer stated that the company has already reached the top tier in the electric vehicle field and has no need to fear Chinese competition. BMW Group's sales director expressed that the company is closely monitoring the fierce price war in the competitive Chinese market ahead of next year's launch of the new iX3 model.

However, the Financial Times noted that it wasn't only Germans expressing confidence this week. Chinese automaker BYD Company Limited stated that Western competitors have still not caught up with its electric vehicle technology. "Even though some brands are catching up, I think we still have significant room for development," said Li Ke, Executive Vice President in charge of BYD's international expansion business.

The Financial Times pointed out that German automakers' latest "comeback declarations" mark further intensification of competition in the European electric vehicle market, while Chinese companies have rapidly expanded their influence in this market.

According to data from Schmidt Automotive Research, a Berlin-based research company, Chinese brands achieved a record 5.7% share of the UK and European automotive markets in the second quarter of this year, with their electric vehicle market share rising to 10.7%.

Volkswagen believes that with its new models, stronger cost foundation, and partnerships with American electric vehicle manufacturer Rivian and Chinese electric vehicle manufacturer Xpeng, the company has the tools to fight back.

As Europe's largest automaker, Volkswagen still dominates the region's electric vehicle market, holding a 30% market share in August this year. According to data from Jefferies investment bank, Mercedes-Benz, BMW, and Tesla have all seen their European market shares decline; meanwhile, BYD Company Limited's share of the European electric vehicle market has risen from 2.5% to 3.8%.

"We firmly believe that in the future we will become the driving force of global automotive technology," said Oliver Blume, CEO of Volkswagen Group and Porsche Group.

At this year's Munich Motor Show, Volkswagen showcased four entry-level electric vehicles planned for launch next year, with starting prices of 25,000 euros (approximately 210,000 yuan); BMW similarly introduced new electric vehicles, with its SUV model iX3 becoming the first model produced based on the company's Neue Klasse platform, marking the launch of a new generation product line with more powerful computing capabilities; Mercedes-Benz promised significant software upgrades and longer battery range, launching entirely new product lines.

According to Reuters, Mercedes-Benz Chief Technology Officer Markus Schaefer stated on September 8 that Mercedes-Benz has no need to fear Chinese competition in the electric vehicle field, but is working to reduce costs in the price war. "We have already reached the top tier in electric vehicles, so we have no need to fear China." He added that the company is working with its Chinese development team to reduce costs.

BMW Group Board Member and Sales Director Jochen Goller stated on the same day that BMW is closely monitoring the fierce price war in the competitive Chinese market ahead of next year's launch of the new iX3 model. However, he declined to reveal the iX3's pricing in China, with the model's price to be determined before its launch in China in the first quarter of 2026. "We see incredible price wars," Goller said. "Of course, we must consider market conditions in the current competitive environment."

Starting next year, BYD Company Limited plans to introduce its ultra-fast charging technology in European models and achieve production of all electric vehicles in Europe within three years. "This is a huge change," Li Ke said, referring to BYD's new battery charging system that can add approximately 470 kilometers of range in 5 minutes.

Changan Automobile plans to launch its Deepal S07 SUV priced at 39,990 pounds (approximately 380,000 yuan) in the UK this month to establish a foothold in Europe. This Chinese automaker plans to open a factory in Europe within the next few years and aims to become one of the top ten automakers in the UK market. GAC International Global Chief Operating Officer Thomas Schemera stated that the company plans to produce in Europe "as soon as possible" to address higher tariffs imposed by the EU on Chinese-made electric vehicles.

Analysts point out that as more Chinese brands enter the European market, one challenge companies face is how to establish brand differentiation in European consumers' minds.

Some European automotive executives believe that Chinese brands cannot easily achieve the same cost competitiveness in Europe as in their domestic market due to higher labor and energy costs in Europe.

BYD's Li Ke stated that the company's experience manufacturing cars in Thailand has taught it how to maintain cost advantages, and it will build factories in Hungary and Turkey. "We are very clear about how to maintain control over manufacturing costs," she added.

From September 9 to September 14, the 2025 IAA MOBILITY (Munich Motor Show) is being held in Munich. Two years ago, at the previous Munich Motor Show, China's electric vehicle industry made a stunning impression and gained significant recognition.

"Chinese hybrid and electric vehicles make strong landing in Munich, advancing into European markets," Bloomberg reported on September 1, stating that Chinese automakers are now preparing to launch a series of hybrid and pure electric vehicles for the European market, planning to use the Munich Motor Show to launch a new round of expansion in the region.

Julian Litzinger, an analyst at Dataforce, a well-known European automotive market data analysis agency, stated that Chinese automakers have performed particularly well in the rapidly growing hybrid vehicle sector. "This growth momentum seems far from over." He believes that as Chinese automakers launch more hybrid models, "there is still growth potential in the future."

German media, citing organizers from the German Association of the Automotive Industry (VDA), reported that at this year's Munich Motor Show, China is the country with the most exhibitors outside Germany, with 116 exhibitors from China. VDA stated that this year's Munich Motor Show has become the most diverse platform in automotive manufacturers' history, which is undoubtedly a positive interpretation. The negative interpretation is that even at this German domestic exhibition, German automotive manufacturers' position is declining—the same is true in the global automotive market.

Automotive information platform Inovev concluded that this year's Munich Motor Show will be "a battle between Germany and China for dominance in the electric vehicle field." According to official data, China's passenger vehicle sales in the first half of this year reached 10.9 million units, while Europe's passenger vehicle sales were only 6.8 million units. In the new energy vehicle sector, China sold 5.524 million new energy passenger vehicles in the first half of this year, more than three times Europe's figure (1.782 million units).

On September 11, the China Association of Automobile Manufacturers announced that from January to August this year, China's automotive production and sales both exceeded 20 million units for the first time.

The latest data shows that from January to August this year, China's automotive production and sales completed 21.051 million and 21.128 million units respectively, increasing 12.7% and 12.6% year-on-year. Among these, new energy vehicle production and sales completed 9.625 million and 9.62 million units respectively, increasing 37.3% and 36.7% year-on-year, with new energy vehicle sales reaching 45.5% of total new vehicle sales.

In terms of exports, from January to August, automotive exports reached 4.292 million units, increasing 13.7% year-on-year. Among these, new energy vehicle exports reached 1.532 million units, increasing 87.3% year-on-year.

A relevant official from the China Association of Automobile Manufacturers stated that "dual new" policies continue to take effect, policies such as personal consumption loan fiscal interest subsidies were introduced in a timely manner, enterprises showed high enthusiasm for new model launches, and the industry's comprehensive rectification of "internal competition" work continues to show results, with the automotive industry operating steadily overall.

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