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Volkswagen and Hefei are clearly embarking on a rare two-way journey.

Text丨Li Muyu from Zhijia.com
Editor: Langlang Mountain and Mingzhi Mountain

If the Volkswagen ID. was not launched, I would not have noticed that Hefei is so colorful at night.

For a moment, I couldn't tell whether I was in Guangzhou or Shanghai.

On the way back to Beijing and to Hefei High-Speed ​​Railway Station the next day, the online car-hailing driver said: "We are still some distance away from Shanghai. Let's develop for another ten years."

After catching up with Shanghai in ten years, this ordinary citizen of Hefei is humble and confident.

In terms of geographical distance, Hefei is less than 500 kilometers away from Shanghai, and it only takes more than two hours by high-speed rail.

On the morning of the launch of the Volkswagen ID. , Hefei Daily published an article titled "Who will become the "first city" for new energy vehicles in China?"

The article quoted a set of figures: In 2023, the top ten cities in China's new energy vehicle production will be: Shenzhen (1.786 million vehicles), Shanghai (1.2868 million vehicles), Xi'an (983,800 vehicles), Hefei (740,000 vehicles), Changsha (726,900 vehicles), Changzhou (678,000 vehicles), Guangzhou (650,000 vehicles), Chongqing (500,300 vehicles), Liuzhou (477,000 vehicles), and Zhengzhou (316,000 vehicles).

Among the top ten cities in the country in terms of new energy vehicle production, Hefei ranks fourth.

After the listing of Yida, Hefei now has manufacturing plants of four major automakers, including BYD, NIO, Volkswagen Anhui, and JAC Motors.

In 2017, JAC Volkswagen was established and listed as the "No. 1 Project" of Anhui Province's advanced manufacturing industry. In 2020, the joint venture was renamed Volkswagen (Anhui) Co., Ltd. In the same year, JAC Group signed a strategic cooperation agreement with Germany's Volkswagen Group.

Volkswagen's stake in the joint venture increased from 50% to 75%, and it gained full operational control. This became the first joint venture company in which Volkswagen Group had absolute control since entering China, and Hefei quickly reaped the rewards. "We gradually developed Volkswagen Anhui and established the 'Volkswagen Intelligent Electric Vehicle Center'," explained Dr. Ge Wandi, CEO of Volkswagen (Anhui) Co., Ltd.:

“The Volkswagen Smart Electric Vehicle Center includes three core companies in the value chain:

“First is Volkswagen (China) Technology Co., Ltd. (VCTC), which is 100% owned by Volkswagen. This is our technical center in China, responsible for all R&D work and cooperation with all software partners, such as our cooperation with Thundersoft and Horizon Robotics in autonomous driving.

“Secondly, our Volkswagen (Anhui) Co., Ltd. (VWA) is mainly responsible for production and logistics, with Volkswagen holding a 75% stake;

“Again, Volkswagen (Anhui) Digital Sales Service Co., Ltd. (DSSO) led by Yang Fang is a sales company, which is also 100% owned by Volkswagen and is responsible for digital sales and service work. "

"These three companies cover a complete value chain of automotive R&D, production, sales and services."

What he did not mention is that Volkswagen has also invested in Hefei and has become its largest shareholder in Guoxuan High-tech, China's fourth largest power battery company.

These companies, together with Volkswagen Group’s internal partners such as CARIAD China and Volkswagen (Anhui) Components Co., Ltd., and external partners such as Horizon Robotics and ThunderSoft, have jointly built a complete smart electric travel ecosystem in Hefei.

In the article “Who will become China’s “first city” for new energy vehicles?”, Hefei Daily wrote: “Coming to Anhui, Volkswagen’s trajectory has changed.FAW-Volkswagen, SAIC Volkswagen and Volkswagen Anhui are the three major players.”

As China's intelligent and electrified transformation accelerates, Hefei is likely to surpass Changchun and Shanghai in Volkswagen Group's transformation strategy.

Among them, the Chinese R&D Center VCTC is on par with the Volkswagen Group’s headquarters in Wolfsburg, and is gradually being known as the "Little Wolfsburg" in terms of scale.

In other words, Hefei not only carries Volkswagen's clear goal of transforming to electrification in China, but is also a testing ground for the Volkswagen Group's transformation to electrification and intelligence.

Dr. Ge Wandi said:

We are doing this along the entire value chain, not just by ourselves, but also with Horizon, Thundersoft, CARIAD, etc., and with Xiaopeng to develop the next generation of models. In general, our factory in Hefei aims to fully focus on the strategy of "in China, for China". We hope to produce higher quality electric vehicles and respond more quickly in a rapidly changing market like China to meet the changing needs of Chinese users.

It can be said that among all its joint ventures in China to date, Volkswagen Group is the multinational group that takes the changes in Chinese market preferences most seriously and responds and actively addresses them in the first place.

The ID., which was launched on July 17, is the first model produced by Volkswagen's Anhui factory. Although it is still within the ID. system, it has paid tribute to China's new car-making forces in all aspects from product definition to production and manufacturing to marketing model.

Therefore, iD. is quite similar to Zhong and Zeekr to Geely and Zhiji to SAIC.

Volkswagen has put a gold label on iD. for the first time. Rather than saying that iD. is a new model, it is better to say that it is a new brand.

Regarding the relationship between iD. and FAW-Volkswagen and SAIC Volkswagen's iD. series, Yang Fang said: "The arrival of ID. is another piece of the puzzle for Volkswagen's brand layout in China, further expanding the lineup of the ID. family in China and actively embracing new customer groups."

After the first new car ID., this new intelligent pure electric product category will launch four new models including SUVs and sedans by 2026.

iD. and FAW-Volkswagen and SAIC Volkswagen's iD. series will adopt a different operating model.

Based on the information that has been made public, Zhijia.com can summarize it into three points:

1. iD.Yuzhong is only produced in China and is aimed at the Chinese market. It will not be sold overseas.

2. Establish an independent sales network and system that is incompatible with the existing iD. series;

3. Volkswagen has two car manufacturing platforms, the MEB platform developed independently by Volkswagen and the CMP (China Main Platform) platform developed in cooperation with Xiaopeng. Volkswagen Anhui's subsequent models will gradually become CMP platforms.

From the above, it can be seen that Volkswagen Group intends to break away from the traditional car-making ideas of FAW-Volkswagen and SAIC Volkswagen, and turn Volkswagen Anhui into a platform for comprehensive cooperation with Xiaopeng Motors.

iD. is a coupe SUV built on the MEB platform. It comes in three versions: Pro long-range, Ultra long-range, and Max high-performance. After its price of 209,900-249,900 yuan was announced, a picture of Li Bin, a guest of the press conference, laughing loudly circulated on the Internet. Some media people said: Li Bin feels that Ledao, whose production line is also in Hefei, is stable.

What this means is that the pricing of ID. is a bit high.

From the perspective of ID.com, L6 and TeslaModel Y（parameter丨picture) Comparing the data of the three models, ID. has no advantage in body size and price.

But one thing is overlooked. In terms of battery capacity, which accounts for the largest proportion of the cost of electric vehicles, the ID. series is equipped with 82.4kWh CATL ternary lithium batteries, and its claimed maximum range of 621 kilometers can be said to be an absolute reverse false label.

Volkswagen also introduced the traditional practices of fuel vehicles into electric vehicles: even when the displayed range shows 0 kilometers, its low-power mode can provide up to 15 kilometers of additional emergency range.

ID. has put a lot of thought into core indicators.

Of course, in the two areas of smart cockpit and intelligent driving, although it lacks a little surprise, there is no generation gap with domestic national-level products.

1. With a virtual AI smart partner, it supports user personalized image customization and real-person voice cloning;

2. The new generation of cognitive intelligence large language model (LLM) developed in cooperation with iFLYTEK is installed in the vehicle;

3. The intelligent connection ecosystem is rich, with built-in entertainment applications such as iQiyi, Youku, Tencent, and Himalaya, and supports the triple mobile phone ecosystem of CarPlay, CarLife, and HiCar;

4. The new IQ. Drive full-journey intelligent driving system is standard, covering all scenarios of daily travel. Smart parking supports smart parking, remote parking, memory parking and mobile phone online car search functions.

As a coupe SUV, ID. is equipped with a variable steering system that is only available in luxury performance cars, which can achieve a minimum turning radius of 4.7 meters (rear-wheel drive). It is also equipped with a high-performance chassis and front and rear independent suspension, which can achieve 0-100 acceleration in 5.6 seconds (four-wheel drive).

However, as a model priced at more than 200,000 yuan to compete with domestic new forces, its biggest shortcoming is the lack of high-end intelligent driving functions.

At the Volkswagen Group level, its layout in the field of high-end intelligent driving has designed two technical routes for fuel vehicles and pure electric vehicles respectively, such as theTouronandMagotanBoth adopt the pure visual perception route of DJI Car (now renamed Zhuoyu), and will launch the city OTA function in its next generation of products.

In the field of electric vehicles, its local partner is Horizon.

Its next generation of models will adopt advanced intelligent functions based on the Horizon Journey 6 chip.

Let's take a look at this picture of several major investments Volkswagen has made in the industrial chain in China in recent years. We can roughly understand that Volkswagen has made preparations to build a smart electric vehicle to compete in the Chinese market, and has laid out power batteries, smart cockpits, intelligent driving suppliers and electronic and electrical architecture (CEA).

And all of this actually revolves around Volkswagen (China) Technology Co., Ltd. (VCTC).

Today (July 22), Volkswagen Group and Xiaopeng Motors signed a strategic cooperation and joint development agreement on electronic and electrical architecture technology. The two parties announced that from 2026, the pure electric vehicles produced by the Volkswagen brand in China will be equipped with an electronic and electrical architecture based on regional control and quasi-central computing-CEA ('China Electronic Architecture'), including models developed based on the new CMP platform and MEB platform models planned to be launched in China in the future.

This new electronic and electrical architecture was jointly developed by Volkswagen (China) Technology Co., Ltd. (VCTC), CARIAD China and Xiaopeng Motors. Volkswagen said that CARIAD China will play a key role in the project and integrate the latest generation of advanced automated driving assistance solutions (ADAS) and smart cockpit software functions for the new architecture research and development.

According to a recent report by 36Kr: On July 18, hundreds of Volkswagen engineers flocked to the headquarters of Xiaopeng Motors, sparking heated discussions in the market. In July last year, Volkswagen invested US$700 million in Xiaopeng Motors, acquiring a 4.99% stake and a board observer seat. The two parties developed two models based on Xiaopeng's intelligent technology platform, which will be launched in 2026. Since then, the two sides have had a lot of exchanges. But this time, it was not an ordinary technical exchange. According to people familiar with the matter, hundreds of Volkswagen employees came to Xiaopeng, actually based on the previous electronic and electrical architecture cooperation project CEA between the two parties, to "accept interviews and training" at Xiaopeng headquarters.

In the Chinese market, Volkswagen is viewing Xiaopeng as a company like Tesla and is embracing it to cooperate and learn wholeheartedly.

It can be said that the electric vehicles produced in Hefei by then will be built based on China's local R&D and industrial chain companies from soul to body.

In order to build a new force with Volkswagen characteristics in China, Volkswagen Anhui has abandoned the mature channels and built a new retail model that is incompatible with SAIC Volkswagen and FAW Volkswagen.

Yang Fang introduced that our sales model is a mixed sales model: direct sales + agency.

We will have some of our own direct-sale stores, which are operated by our own sales staff of Volkswagen (Anhui) Digital Sales Service Co., Ltd. There are two purposes for this:

First, let our sales staff and front-line staff face the market and consumers directly and listen to their voices.

Second, our direct-operated stores are our innovation and empowerment centers. Whether in terms of business model or digitalization, we will first try it out in our direct-operated stores. Once it matures and is recognized by the market and consumers, we will quickly replicate it to our agent stores across the country.

"Regarding the agency stores, our agency system is different from the traditional distribution model. Our prices, property rights, and all product inventory are here. We will manage the national unified price, which can better protect the rights and interests of consumers and the profits of dealers, rather than simply selling cars wholesale to dealers.

"In terms of the agency system, about half of our investors are excellent existing investors from the Volkswagen system. The other part comes from excellent external investors.

"Another very important thing is that we are Volkswagen (Anhui) Digital Sales Service Co., Ltd., and we have a very powerful digital system based on the end-to-end process of consumers in our background. This digital system digitizes the consumer's touchpoints as much as possible. The user's feedback on a certain touchpoint will be returned with data. Based on a large amount of data, we will continue to improve our business model, improve our services, and improve our efficiency."

The emergence of Volkswagen Anhui has freed the Volkswagen Group from years of equity ratio entanglements. On the 40th anniversary of its entry into China, it began to re-plan its R&D, production and sales systems according to its own ideas.

This is of course somewhat experimental in nature, but Volkswagen Group's low profile and attitude of looking at its partners at an equal footing are worthy of respect.

Will Volkswagen Anhui, FAW-Volkswagen and SAIC Volkswagen, which all produce iD. series electric vehicles, lead to internal competition?

Yang Fang responded: The three (joint venture) companies all have different brand positioning, different targets and consumer group positioning, including ID. Yuzhong, which also has its own target consumers and product positioning. Our positioning is different from that of the other two joint ventures, and there will not be a very direct competitive relationship between us.

In fact, competition is inevitable, but compared with the Chinese Geely Group, such internal competition can be said to be too gentle.

In the Volkswagen Group's plan, the short-term focus of FAW-Volkswagen and SAIC Volkswagen has actually been on the hybrid market.

Will Volkswagen and Hefei produce the same magical chemical reaction as they do with Changchun and Shanghai?

Regarding Volkswagen's experience in Hefei over the past three years, Dr. Ge Wandi recalled: "In the past two and a half years, I came here when the factory was laid. Now Hefei has built the Volkswagen Intelligent Electric Vehicle Center. We have a very strong team and have set very clear goals.In the future in this value chain, we hope to reduce development time by 30%, cut material costs, and further reduce the cost of entry-level vehicles.Although the epidemic has had some impact on us, we have also overcome various difficulties, and our current transformation is still proceeding according to the established schedule."

On July 3 this year, Hefei was shortlisted as one of the first 20 pilot cities for "vehicle-road-cloud integration" selected by the Ministry of Industry and Information Technology and other five departments. As the first provincial capital city in the country with "full openness" in its core areas, it has fully opened road testing of intelligent connected vehicles in the main urban area and created the country's first city-level "vehicle, road, network, and charging" integrated cloud supervision platform.

Hefei's ambition to become China's "first city" for new energy vehicles was no longer concealed when iD. was launched.

"It is expected that by 2025, new energy vehicles will account for 50% of the Chinese market. This is a big change, which also means that we have to make corresponding adjustments, especially in investment, that is, to reduce investment in fuel vehicles accordingly and further increase investment in pure electric models and intelligent connected models." said Bernd Barrerd, managing director of Volkswagen Group's business in China, chairman and CEO of Volkswagen Group (China).

Volkswagen and Hefei are clearly embarking on a rare two-way journey.

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