German automaker Volkswagen [VOW:GR] has vowed to boost electric car investment in China, its primary market, in response to three consecutive years of sales decline in the country, as reported by Reuters on April 1. Stefan Mecha, CEO of Volkswagen’s Chinese arm, announced the company’s plan to increase the number of electric vehicle (EV) charging stations in China to 17,000 by 2025. By 2024, the firm plans to invest EUR16bn (UDS16.26bn) in the country on electric mobility together with its three joint ventures (JV). Stefan expressed his confidence that there will be a recovery, despite softer short-term demand in China.. Stefan also called on China to extend the purchase tax exemption on new energy vehicles (NEVs), which include both pure electric and plug-in hybrid cars, beyond this year, in a move to support the sector.
Volkswagen was China’s top-selling car brand in 2019, selling 4.23m units. However, amid the COVID-19 impact, it saw 9.1%, 14.1%, and 3.6% sales declines in 2020, 2021, and 2022, respectively. In contrast, China’s passenger car sales experienced a 2.1% and 1.9% year-on-year growth in 2021 and 2022, mainly attributed to the booming EV market. In 2022, China’s retail sales of NEV almost doubled from 2021, reaching 5.67 million units, as consumers rushed to take advantage of the purchase tax exemption policy for NEVs, which was initially set to expire at the end of 2022. Last September, China extended the exemption policy for the third time to the end of 2023 to shore up the NEV industry.