The boss of the Volkswagen Group’s operations in China believes that the electric vehicle market is “overheating” and that there will be consolidation across the industry.
Ralf Brandstätter recently spoke at the 2023 China Automobile Forum in Shanghai and noted that many new electric vehicle startups are collapsing or about to exit the market, noting that high battery prices are adding to the difficulty of developing and launching EVs.
“Currently, there are more than 120 car makers within the [electric vehicle] market, and about 150 new models will be launched in 2023,” Brandstätter said. “Intense market competition and high battery prices make them face severe economic pressure. Short-term sales success requires extremely high capital investment. We are facing a situation where the market is overheating. Consolidation of the playing field is in full swing.”
Read: VW Won’t Engage In A Price War In China, Focuses On Profitability Instead
This isn’t the only thing that Brandstätter is concerned about, Autocar notes. During his address at the conference, he said that the dramatic discount of EVs throughout China could ultimately hurt the consumer given that many car manufacturers selling discounted EVs may not be around for much longer.
“The fierce competition has led to deep price discounts in recent months. This will ultimately harm the interests of consumers,” he said. “They will no longer be able to get services from retired brands, or they will see a significant price cut on the models they buy.”
It is with this in mind that VW will not make aggressive price cuts to its EVs in China purely in an effort to increase sales and grow its various brands. Instead, it is more focused on profitability and also plans on launching 17 new ICE models in China by 2030.
“For us, the profitability of the business is the most important. We will not engage in unhealthy market competition in order to achieve short-term delivery growth,” Brandstätter noted.
