Volkswagen Group is aiming to cut its development costs in half for EVs by shifting some product development to China—as the automaker looks to grow its global share of the electric vehicle market.
The details: The automaker revealed Tuesday that, after making several investments in China, it is now positioned to develop new vehicles outside of Germany for the first time, including technologies such as assisted driving, which are central to EV development, reports Financial Times.
VW’s China-based development plan includes releasing about 30 EV models in the country over the next five years for local research and development.
Supply chain efficiencies, including battery procurement, shorter development periods, and lower labor costs, will cut the cost for some EVs in China by as much as 50%.
VW’s development cycle for its new EVs has been shortened by 30%, compared with the traditional process, which takes roughly 50 months.
The automaker’s investments in China include billions in its innovation center in Hefei, eastern China, where it has more than 100 advanced laboratories for testing software and hardware, alongside batteries and EV powertrains.
What they’re saying: “We can now run software, hardware, and full-vehicle validation processes in parallel, shorten decision loops, and bring innovations to maturity much faster,” said Thomas Ulbrich, chief technology officer of Volkswagen’s China operations.
Why it matters: VW is betting that lower-cost, faster development in China will help it compete more effectively in the global EV price war, especially against Chinese rivals that have built a lead in affordable, tech-forward electric cars.
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Between the lines: News of VW’s aggressive China-based development strategy comes as the automaker works to better position itself in the EV market beyond Germany.
VW currently does not rank among the top 10 pure battery and plug-in hybrid car producers in China, per Financial Times.
In October, the automaker reported that battery-electric vehicle (BEV) deliveries in China were down 43% year-on-year for the first nine months of 2025.
Globally, VW’s BEV deliveries were up 42% from January to September, with BEV deliveries in Europe increasing 78% and deliveries in the U.S. up 85%.
Bottom line: By leaning on China for faster, cheaper EV development, VW is trying to close its competitive gap in the world’s largest EV market while bolstering its global electric ambitions.
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