“Mr. Brandstätter, the war involving Iran has recently driven up oil prices. Electric cars are becoming more attractive. Does that make China's electric cars the winners of the conflict?
Rising oil prices have caused fuel prices to climb significantly in China, too. The perception here is that cars with internal combustion engines are becoming more expensive to run and are subject to a new kind of volatility—one that is beyond China's control.
At the same time, electricity prices remain consistently low—around seven euro cents per kilowatt-hour. That is a quarter of what people in Germany are currently paying.
This boosts the appeal of electric cars, even though it remains to be seen whether the effect will be lasting.
Does this strengthen China's position as the world's largest exporter of electric cars?
I don't see a direct link there. Exports from China had already been rising sharply: around six million of the roughly 30 million cars produced in China go abroad. This year, that figure is expected to reach seven million. The majority are still affordable vehicles with internal combustion engines. But the share of electric vehicles is growing.
We are witnessing a wave of Chinese vehicles surging primarily into the Global South, thereby setting technology standards there—spanning from Southeast Asia, the Middle East, and Africa all the way to South America.
Is this an opportunity for VW China to ride that wave?
Over the past three years, we have geared ourselves toward the market's fierce competition through our 'In China, for China' strategy. With this cost base, we can now open up new markets for the Group." We also need to deliver technology and products that safeguard our position in other regions against growing Chinese competition—for instance, in South America. However, this path is not a sure-fire success. Despite similar standards, vehicles and technologies must be adapted for each market; sometimes, this involves practical details like whether the steering wheel is on the right or the left.
For a long time, the focus was on the risk of China occupying Taiwan and triggering a major crisis. Suddenly, it is the US that poses a greater threat to the global economy. Do you feel vindicated in your assessment?
We anticipated that geopolitical tensions would continue to rise. That is why a robust business model has always been a key part of our strategy. We develop and build our cars entirely in China, using our own software architecture and platforms. This makes us less vulnerable to global crises. At the same time, two technological spheres are emerging—one for the West and one for the East—with differing regulatory requirements and technical standards. We have aligned the Group accordingly, utilizing independent technical solutions and partners for each region—for example, partnering with Xpeng in China and Rivian for the Western Hemisphere on electronic architecture.
The Chinese automotive market is fiercely competitive. Up to 250 new models are set to launch this year—one for every working day. How do you keep up with that?
The competition is extreme. More than 100 brands are vying for a slice of the pie here. Subsidies for electric vehicles were cut in half at the beginning of the year, resulting in a very weak first quarter. Customers are adopting a wait-and-see approach, partly due to economic uncertainty.
What are your expectations regarding market trends?
It is quite possible that—pandemic aside—we will see a contracting market in China for the first time since 2018. In the best-case scenario, the market will stagnate at 24 million vehicles. This also impacts our long-term forecasts; by 2030, the market is expected to hover around the 28-million-vehicle mark. Analysts’ projections now tend to hover around the 26-million mark. Growth will slow down. At the same time, electrification will continue to accelerate rapidly.
By 2025, one in every two vehicles sold in China was already an electrified model; this year, we anticipate that figure to reach 60 percent.
Do you have excess capacity that needs to be reduced?
We have already adjusted our capacity to match our market expectations. We are now pushing ahead with the conversion of our plants for electric mobility. This year, we are launching a new electric vehicle on average every two weeks. Almost all of these cars were developed in China, with a sharp focus on the preferences of Chinese customers. We performed well relative to the competition in the first quarter. Our internal combustion engine models enabled us to score points there; Volkswagen and Jetta, as a combined brand, were actually market leaders. That gives us momentum and secures the cash flow we need to invest in new technologies.
VW enjoyed long-term success in China, but recently you’ve lost significant ground. Profits have dropped sharply. What would need to happen within a year for you to say: "The product offensive was a success"?
We aim to significantly expand our market share in electric vehicles with our new models. But that doesn't happen overnight. Many of the products aren't arriving until the second half of the year. We will certainly see the initial impact on our EV delivery figures this year. The model offensive will then show its full effect by 2027.
What kind of volume are you aiming for?
We are the market leader in combustion-engine vehicles with a 22 percent share. We are underrepresented in the electric car segment. Our goal is to remain the leading international manufacturer in China and to rank among the top three companies overall in the country.
At the Beijing trade fair, you’ll be facing a dominant force of Chinese providers. How do you intend to break through?
I’m not worried about that. We have strong momentum with our initial new products. Many new customers are visiting our dealerships, and we’re seeing positive feedback on social media. At the Beijing Auto Show, we’re now following up with a whole range of new electric vehicles.
You’ve been talking about "transition years" in China for ages. It’s starting to feel like a "transition decade." When will this phase end?
It’s a marathon—one where the operating conditions are constantly changing. It’s not about who leads the pack, but who actually makes it to the finish line. The crucial thing is to constantly work on our competitiveness. We’ve achieved a solid cost base and remain profitable. That’s a huge strength; many others here are operating at heavy losses. We expect our investments in new models to pay off next year. However, we certainly won’t return to the super-high margins of the past. Those days are gone. Competition in China is simply too fierce for that now.
When will Porsche regain its footing in China?
The economic situation in China is strained. Many companies are grappling with consumer reluctance to spend and the impact of the trade war. Jobs are being cut. In the current climate, flaunting one’s wealth is socially frowned upon; a delicate touch is required. Consequently, demand for luxury products is currently lower.
There has long been talk of a market shakeout. When will that happen?
Many in the industry speak of a "knockout phase" or use similar dramatic terms. However, we can only expect real changes in the medium term—towards the end of the decade. It is clear that smaller companies, in particular, will find it increasingly difficult to keep investing without generating profits—especially as the market’s growth rate slows significantly in the future.
What is your take on the government's efforts to curb this competition?
The Chinese government has recently tightened regulations and is cracking down harder on unfair competitive practices. Subsidies at the provincial level are being scaled back, and there are now deadlines for paying suppliers—meaning payments can no longer be indefinitely deferred.
Are companies complying with these rules?
The rules exist, and compliance is monitored. I cannot say whether everyone is sticking to them. We have never engaged in such practices and maintain very stable relationships with our suppliers. That stands us in good stead, even during difficult supply situations.
What are the key differences between the technology ecosystems in China and the West?
Customers and usage patterns differ fundamentally. In China, the average new-car buyer is 34 years old and has grown up with advanced digitalization. Here, the car is seen as an extension of one’s living space—a place where people want to spend a lot of time. Digital features, entertainment, and integration into the digital ecosystem are therefore crucial. An advanced driving assistant capable of driving autonomously in certain situations comes as standard, given the significant amount of time spent in traffic jams. The average European new-car buyer is considerably older—54 years old, on average. For them, the car is primarily a means of transport to get from A to B.
By contrast, the technology available in Germany often seems downright outdated. Why don't customers here get what has long been standard in China?
Our vehicles in Europe are state-of-the-art; they perform very well against the competition, particularly when it comes to assistance systems. The difference lies in the requirements. For example: In China, customers want to control the car using voice commands and screens, whereas in Europe, we tend to prefer operating many functions via analog controls. It is less a matter of "outdated" versus "modern" and more about differing customer needs. We align our approach accordingly.
Some technologies, such as autonomous driving, are already part of everyday life in cities like Shanghai. Can you transfer those capabilities to Europe?
It’s not that simple. System specifications and requirements vary by region. While traffic in China moves primarily at low speeds, the technology in Germany must function flawlessly even at high speeds. That is technologically much more complex. What we are consistently transferring to our development units in Germany are our processes. In China, we learned how to get cars onto the road in just 24 to 36 months—and how to conceive and develop a car with software as the starting point.
What does that mean in concrete terms—what do you do differently now?
Software development is one example. Control units used to come from suppliers; changes had to be coordinated, sent back, and subsequently reintegrated. Today, we program the software ourselves and test it in parallel on setups that act as a vehicle framework—a sort of skeleton made of cables and control units. That knowledge is then shared with our other locations via the teams involved. At our development center in Hefei, we have around 200 colleagues from global development departments who return to their home bases after a few years, taking their experience with them. It shouldn't be viewed in purely mechanical terms, though.
China has just adopted a new five-year plan. What conclusions do you draw from it?
China has realized that innovation is becoming a decisive factor in global competition. Leading in key future technologies boosts geopolitical influence. Consequently, a crucial aspect of the five-year plan is the massive expansion of research and development.
To this end, China plans to increase its spending by seven percent annually. These are massive investments. A significant portion is being channeled into artificial intelligence, quantum computing, and robotics. China is determined to assume a leading role in these areas. For us as a company deeply integrated into the Chinese ecosystem, this presents an opportunity to participate in this development.
What does this mean for Germany?
Germany needs to refocus its efforts on research and development. This fosters economic strength—and, by extension, self-confidence. We also need greater consistency in implementation, particularly regarding major transformation initiatives. Take China as an example: support for electric vehicles was pursued steadfastly for a decade. It is continuing through 2027, exactly as originally structured. Even the reduction in subsidies this year had been announced back in 2020. There are no constant deviations from the plan; instead, there is reliable planning. This consistency and reliability build trust and create an ecosystem that fosters innovation.
So, Germany needs less wavering and more engineers?
That is what you said.
Interview by Christian Müßgens and Gustav Theile.
Ralf Brandstätter
Ralf Brandstätter is an executive who embodies the concept of "homegrown talent" like few others. He has spent his entire professional career within the Volkswagen Group. After training as an industrial mechanic, he studied industrial engineering and quickly moved into management roles, including a stint at the subsidiary Seat in Spain. In 2020, he became head of the core VW brand based in Wolfsburg—which, with models like the Golf, Passat, and the electric ID.4, forms the heart of this sprawling automotive enterprise. Just under four years ago, the Group sent him to China, where he oversees operations in the People's Republic as a board member. VW is facing pressure there; local manufacturers are making significant inroads with their own vehicles, and Brandstätter is tasked with countering this trend through new products. In his spare time, the family man enjoys endurance sports and reading.” [1]
1. Der Wettbewerb in China ist extrem": Hohe Ölpreise machen Elektroautos attraktiver und sorgen auch in der Volksrepublik für Turbulenzen. VW-Chinavorstand Ralf Brandstätter erklärt, warum eine Welle chinesischer Autoexporte in den globalen Süden rollt - und was Deutschland von Chinas Ingenieuren lernen kann. Frankfurter Allgemeine Zeitung; Frankfurt. 16 Apr 2026: 22.
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