German brands seek to catch up in EV era

The German trio of Audi, BMW and Mercedes-Benz is pursuing different strategies to regain ground in China, as they seek to adapt to a market increasingly shaped by domestic electric vehicle makers.

Audi is reorganizing its joint-venture operations and BMW is betting on its Neue Klasse technology. Mercedes-Benz, meanwhile, is still searching for a more effective strategy in the new energy vehicle market.

Audi, Volkswagen's premium subsidiary, has resolved the internal rivalry between its two Chinese partners, FAW and SAIC, and appointed Jeff Zhang, the first Chinese president of Audi China in its history, to head its operations in the country.

Last week, it announced that FAW will focus on the Four Rings brand, covering both electric and combustion-engine vehicles, while SAIC will concentrate on the promising AUDI electric vehicle brand, co-developed with Audi specifically for the Chinese market.

"With clearer market focus and differentiated brand positioning, we are creating a stronger foundation for long-term, sustainable success in China," said Johannes Roscheck, outgoing president of Audi China.

Both FAW and SAIC produce and sell models bearing the Four Rings logo, although sales of SAIC Audi models have been negligible. SAIC will continue selling Four Rings products through the end of 2027.

FAW, Audi's partner since the 1990s, had been reluctant to accept Audi's decision to bring in another Chinese partner when the idea was first floated in 2016.

That was understandable: it was the era of gasoline-powered cars, especially foreign brands, and a new partner meant FAW would have to share Four Rings products and business opportunities.

The move will allow both businesses to sharpen their market positioning in an increasingly competitive market.

FAW will explore opportunities by building on its traditional strength in gasoline-powered cars and Audi's e-tron lineup, catering to consumers who appreciate authentic German products.

SAIC will focus its resources on the burgeoning AUDI brand, which is more tailored to Chinese consumers and relies primarily on local technologies.

Audi headquarters in Ingolstadt has attached great importance to the China-specific brand as an experiment to test its business viability in an NEV market dominated by local marques.

In September, SAIC and Audi announced plans to establish an R&D center in Shanghai, with full-vehicle development and end-to-end R&D capabilities dedicated to the AUDI brand.

At least four all-new AUDI models will be developed on the next-generation Advanced Digitized Platform, or ADP, an architecture designed for future intelligent connected vehicles. The first model is expected to arrive in 2028.

The brand has so far launched two models: the E5 Sportback in 2025 and the E7X this year.

BMW is confident in its Neue Klasse strategy, combining German engineering with extensive localization for the Chinese market.

The Neue Klasse iX3, introduced in August, is scheduled for delivery in the fourth quarter. The i3 will follow soon.

In October, BMW began series production of its sixth-generation high-voltage batteries in Shenyang, Liaoning province, its largest production site. The batteries will power Neue Klasse models.

The batteries use BMW's new cylindrical cells, which offer more than 20 percent higher energy density than the previous generation, while improving charging speed and range by up to 30 percent.

The technology's potential was demonstrated by the i3, which completed a 1,213-kilometer drive on public roads without recharging.

BMW said it plans to bring nearly 20 new and updated models featuring Neue Klasse technology to the Chinese market by 2027.

"The new era is not something we wait for. It is something we create," said Milan Nedeljkovic, chairman of the board of management of BMW. "BMW is ready to lead the new era," he added.

Mercedes-Benz is still searching for a viable path in the NEV era, following tepid responses to models including the electric CLA and the departure of an experienced Chinese sales executive.

Oliver Thoene, a Mercedes-Benz board member responsible for China business, defended the lackluster performance at the company's annual results conference, arguing that the electric CLA was a niche model to test the market.

He pinned his hopes on the electric GLC, but the model sold 1,600 units in its first month after launch in July.

"Mercedes has wasted too much time and has not learned its lesson," said an analyst who asked to remain anonymous, referring to the electric models that have failed to gain traction.

"Yes, it has R&D teams in China. It partners with local Chinese technology companies like Momenta. But it has not come up with a model that counts," the analyst said.

Some attribute this to Stuttgart's indecision over electrification, with the company making successive promises that it later shelved.

Mercedes-Benz currently builds vehicles on several technical platforms, including MMA for compact entry-level models such as the CLA, and MB. EA, a scalable architecture for midsize and large electric passenger cars.

The 140-year-old automaker now plans to design and build its vehicles using a new modular approach. The goals are lower costs, greater efficiency and faster production. Internally, the approach is known as "tech-stacks". The carmaker has said it will take until the 2030s for the approach to deliver results.

But time runs fast. BMW sold 107,210 vehicles in China in the third quarter, followed by Mercedes at 99,592 and Audi at 94,597.

Each of them was outsold by Nio, which delivered 111,638 vehicles during the period and dreamed just years ago of becoming a Chinese equivalent to the trio.

lifusheng@chinadaily.com.cn