SHANGHAI, June 22 (Reuters) – Volkswagen AG’s ID series (VOWG_p.DE) – the backbone of its electric vehicle ambitions – is experiencing what even company sources are calling a worrying start in China.
May sales of two ID.4 electric SUV models, launched just two months earlier, were just 1,213 combined. And that was about 200 less than in April, according to automotive consultancy LMC.
Sales are well below initial hopes, said four people with knowledge of the matter, and what other automakers have achieved with the first sales of flagship electric vehicle offerings in the world’s largest car market.
Volkswagen’s business with state-owned SAIC Motor (600104.SS), which makes the slightly larger ID.4 X model, was targeting sales of 50,000 to 60,000 vehicles this year, according to comments from Yang Siyao, a company marketing manager, in Chinese media in March.
A separate venture between the world’s No.2 automaker and FAW, which makes the ID.4 CROZZ, had similar goals, one of the sources said. These goals now seem unrealistic.
In addition, the electric vehicle factories of the two companies are operating below 10% of their production capacity, according to three of the people.
The sources blamed the poor start to a lack of smart tech features, fierce competition, a late launch from Tesla Inc (TSLA.O) and Chinese electric vehicle makers, as well as issues with its new electric vehicle sales network.
“Sales so far are lower than our previous expectations. We had to cut production plans for ID.4 over and over again, ”said one person who, like other sources, was not authorized to speak to the media and declined to be identified. .
“It’s not healthy, but at the moment customers are not coming to buy them. “
Another sign of business stress, SAIC-Volkswagen has suggested staff members buy ID.4s, according to an internal memo seen by Reuters.
For comparison, Tesla sold 6,612 of its Model Y in China in the first two months after launch. The sales performance of the ID.4 in China also contrasts sharply with that of Europe, where it is the best-selling electric car with 12,101 units sold in the first two months after its launch, according to JATO Dynamics.
Volkswagen said in a statement to Reuters that ID. Sales in China have been in line with expectations as it expands production and a new sales network, adding that it does not view Tesla’s Model Y as a direct competitor to the ID.4, which occupies a type segment. different vehicle.
He also said he was confident the two ID.4 models would see sales growth and noted plans for the launch of three more ID models this year in China.
NOT SMART ENOUGH?
More than any other country, China has aggressively pushed for the adoption of electric cars, introducing sales quotas as it seeks to reduce pollution, encourage the growth of its auto industry, and reduce its dependence on oil.
Volkswagen, the country’s largest foreign automaker with 3.85 million vehicles – mostly gasoline-powered – sold last year, is more likely to successfully transition its customers to electric vehicles than the average automaker. He also declared his intention to overtake Tesla as the world’s leading manufacturer of electric vehicles by 2025, ensuring that China will become a crucial battleground.
But customer buy-in is a whole different matter.
In a shopping mall in western Shanghai last week, David Qian, a 50-year-old engineer, was looking for an electric vehicle for his wife, but discovered he was not attracted to the ID.4 X, which starts at just under 200,000 yuan ($ 31,000).
“The car looks good, but I know it’s not smart enough,” said Qian, who owns a Tesla Model 3 and is enthusiastic about its assisted driving technology.
Unlike Tesla models and a growing number of vehicles from Chinese electric car makers like Xpeng Inc (XPEV.N) and Nio Inc (NIO.N), the ID.4 cannot park and does not offer parking. advanced self-driving or advanced voice features. -controlled functions.
“Chinese consumers appreciate the technological and sci-fi sense of electric vehicles, and brand loyalty has always been low, which is completely different from the European market,” said Yale Zhang, chief of staff at Shanghai-based AutoForesight consultancy.
And unlike Europe, competition for electric cars is already fierce in China, where a plethora of manufacturers compete against each other and the best-selling Wuling Hong Guang MINI EV, an entry-level sedan made by a General Motors joint venture. (GM.N), costs only 28,800 yuan ($ 4,450).
In the mall where Qian verified the ID.4, the SAIC-Volkswagen showroom is right next to a store run by Xpeng and close to competing stores owned by EV startup Neta and Huawei, which sells an electric car. in partnership with the car manufacturer. Seres. A store for Chinese electric vehicle maker Aiways is also set to open nearby.
“Compared to Europe, this car has too much competition and these are all new models with a strong sense of technology,” Zhang said.
Volkswagen said in its statement that it will offer new software feature updates in the future and with newer models.
Volkswagen has been faster than some other foreign automakers in China with the development of electric vehicles such as Toyota Motor Corp (7203.T) and Ford Motor Co (FN), but sources say ideally it should have gone more quickly.
The electric vehicle factories of its joint ventures, which can each build 300,000 vehicles per year, were ready for mass production in early 2020, but the time needed to develop the vehicles in Germany meant that the new ID.4s did not. got regulatory approval only in July, they added.
At the distribution level, Volkswagen is grappling with the introduction of new popular sales strategies with purely EV competitors.
Rather than relying primarily on its existing network of around 2,000 dealers, it is moving to an agency-based sales model for electric vehicles where showrooms are typically located in shopping malls, prices are fixed and there is no stock for showroom operators.
The lack of inventory, however, has meant that staff who are accustomed to inventory pressure have less financial motivation to sell the product, people familiar with the matter said.
Volkswagen said in its statement that production at its electric vehicle factories was on schedule and internal feedback on its new agency model was very positive.
He had 12 pieces of identification. stores in China by the end of May and plans to have more than 100 stores by the end of this year. It also increases its number of IDs. sales agents to over 1,000 by the end of the year compared to 825 currently.
($ 1 = 6.4625 Chinese yuan)
Reporting by Yilei Sun and Tony Munroe; Editing by Edwina Gibbs
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