Electrifying China with a
tailor-made Efficiency
strategy Essay

“When the wind of change blows, some build walls and others build windmills,” says an old Chinese proverb. This makes the perfect match for our Volkswagen Efficiency Strategy. The world is changing fast, and in China the clocks run even a little bit faster than elsewhere. China is facing big new challenges. More prosperity, coupled with a careful management of resources. More innovation, also triggered by the digital revolution. And – of course – a sound environment for everybody: these are cornerstones of China’s path to reform. And they precisely reflect our ambition for the future, too.

“More prosperity in combination with a careful management of resources.”

The Chinese government sets the course for new eco-friendly technologies and sustainable behavior. The guideline to reduce CO2 emissions in China to a fleet fuel consumption of 5l, is even more challenging than the 95g/km target for 2020 set by the European Union. The explanation is very simple: in China only 1 % of cars have a diesel engine and there is a preference for more spacious vehicles which naturally are heavier. The answer to this challenge can only be a holistic approach. We have to think in terms of all possible technical solutions, including sophisticated vehicle and powertrain measures as well as alternative drive systems.

First of all, we need to better protect the environment and further reduce carbon dioxide emissions in the future. In this context, the development of electric vehicles plays a key role. At the same time, other issues also need to be considered. For example, the Chinese government has stated that carbon dioxide emissions should peak in 2030 before beginning to fall, which means that all sources of emissions need to get involved in the process of reducing the carbon footprint, including energy suppliers, households and various industries such as the auto industry. More Chinese cities are expected to restrict vehicle registrations in the future, as has already happened for example in Beijing, Shanghai or Guangzhou. This will drive up demand for new-energy vehicles especially in these megacities.

“The development of electric vehicles plays a key role.”

On the subject of plug-in hybrid as a focus of the Volkswagen Group for developing new-energy vehicles in China, I think we should be aware that plug-in hybrid power is the best solution in the short and medium term. Perhaps the development of all-electric vehicles can be realized in the long run. Discussions are ongoing in this respect also with Chinese experts. We need to find solutions to facilitate the development of highly efficient batteries. And at component level we need to consider how to further improve energy conservation in both conventionally powered and electric models.

From the perspective of standards it is also very important to establish an electric vehicle charging standard. Our plug-in hybrids do not require special charging facilities and they can easily be charged over night at ordinary household sockets. However, when we consider all-electric vehicles, a fast-charging infrastructure should first be put in place. So for the future of electric mobility it is essential that common standards for fast charging should be defined immediately. China has not established any unified standard in this regard so far. Currently, for example, you cannot drive an all-electric vehicle from Beijing to Shanghai and rely on charging along the way. This is because the infrastructure has not been completed yet – and even once it is, the standard may not be universal. To this end, we need dependable, stable technologies. This way, in the future we can channel our development investments in the right direction and contribute towards advancing plug-in hybrid technologies.

There is no doubt that the research and development of new electric vehicles is a key pillar to address CO2 reduction from the perspective of the automotive industry. So it is to be welcomed that the Chinese government gives strong support to the market development of new electric vehicles by specific regulations and subsidies. And we are pleased to see that the recent policy initiatives start showing impact looking at the growth of the new energy vehicles production volume in 2014. I am convinced that with joint efforts we go step by step in the right direction – to reach the big goal of sustainable mobility in China.

The biggest challenge confronting Volkswagen is cost. For the time being, electric vehicle technologies are very costly, so customers need to obtain a government subsidy in order to purchase an electric vehicle. For one thing, battery technology costs need to be further reduced; for another, costs can also be reduced by increasing quantities or through volume production. We expect future electric vehicles to achieve the same price levels as conventional models. Thanks to our modular toolkit strategy we are able to electrify nearly every model in our range – to meet the local consumers’ needs in all segments and classes.

“We cannot allow the electric car to be a compromise on wheels.”

Volkswagen is “electrifying” China with a tailor-made new electric vehicle strategy. In the near future, we will be offering Chinese customers an impressive choice of over twenty electric vehicles – from small cars to large sedans and SUVs, from plug-in hybrids to all-electric drives. We cannot allow the electric car to be a compromise on wheels. It has to be perfect in every way – technically mature, practical, safe and affordable.

Prof. Dr. Jochem Heizmann, Member of the Group Board of Management,
with responsibility for ‘China’