Volkswagen EV sales badly trail Tesla in the prized China market, alarming analysts

July 20, 2021, 2:28 PM UTC

Badly lagging Tesla in China, Volkswagen Group pledged to swiftly ramp up sales of zero-emission cars in the country after a disappointing second quarter. 

On Tuesday, the German automaker published sales figures that showed its various brands delivered just over 12,000 battery electric vehicles (BEVs) to customers in China, a crucial growth market, during the three-month period.

Not only was this barely more than a tenth of the 111,000 it sold worldwide, it was less than half of the 28,000 cars Tesla sold in the country in the month of June alone. 

VW Group sales chief Christian Dahlheim said in a statement the launch of the Volkswagen ID.6 model last month should give it a much-needed boost. Seating up to seven for trips with the extended family, the sport-utility vehicle was tailored specifically to meet local tastes.

“We are anticipating a significant acceleration in BEV deliveries in the third quarter, thanks to the expanded Volkswagen ID family,” he said.

Typically the top choice among all Chinese car buyers by a good margin, the group’s core VW brand only ranked among the top 10 BEV manufacturers in the first half of this year.

Analysts have grown increasingly concerned in recent months by evidence suggesting China’s increasingly affluent consumers would much rather shop for other locally built, battery-powered cars such as the Tesla Model Y or BMW iX3. 

China forms the linchpin of Volkswagen’s five-year-old electrification plans, recently updated this month. It equipped two local plants to eventually produce an annual combined total of 600,000 zero-emission cars. 

Outsold two-to-one

“China EV buyers seem to be less impressed by the models’ software features and infotainment system,” Bernstein analyst Arndt Ellinghorst wrote in a research note last week, after insurance data pointed to just 434 units of the ID.6 sold last month.

Accounting for 1.85 million vehicles, or 37% of total volumes, sold in the first half of the year, China is the company’s single largest market and even eclipses the entirety of VW’s Western European home turf in terms of size and importance for the group. 

Tesla, too, has suffered a string of missteps in the country, with sales dipping following concerns over safety and data. Nevertheless, demand has picked up of late in China, helping it outsell Volkswagen Group globally during the first half of the year by a factor of 2 to 1.

While Tesla delivered roughly 386,000 battery-powered cars to customers—with just one brand and four models—its German rival sold 171,000 BEVs in the period across the entire company.

Three-quarters of VW’s first-half volume came instead from customers in Europe, where the group must meet strict, mandatory fleet CO2 emissions standards, lest it pay punitive fines to the European Union. 

The U.S. accounted for another 18,500 vehicles, or 11% of its BEV volumes, in the first six months.

Volkswagen shares rose 0.9% in afternoon trading in Germany.

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