With a declaration of war by the German carmakers, the important auto show in Shanghai was opened on Tuesday. The electrification strategy for the Chinese market is being "driven forward at full speed," Volkswagen announced at the start of the trade fair. VW will accelerate its decision-making and development processes in China, emphasized CEO Oliver Blume.

Volkswagen and the German automotive industry as a whole are in a difficult situation in China. About one in four cars sold in China is already electric. But unlike combustion engines, German brands have hardly played a role in electric cars in China so far. Local brands dominate there.

Volkswagen had scheduled the world premiere of its new ID.7 on the eve of the show. The Wolfsburg-based company has high hopes for the new electric sedan in China. Mercedes, on the other hand, showed an all-electric variant of its luxury brand Maybach for the first time on Monday evening in Shanghai.

BMW performs better

BMW considers itself well positioned in the Chinese market. The company is very happy with its position and is optimistic about the business, said CEO Oliver Zipse on Tuesday at the international auto show in Shanghai. In the highly competitive market for electric cars in China, BMW performs better than all German premium competitors. In the first quarter alone, sales of electric cars in China tripled to around 19,800. This means that the Group has a market share of around ten percent in the field of premium electric vehicles.

Unlike in the entire premium market, BMW does not occupy a leading position in electric cars. Here, for example, Tesla and the Chinese brand Nio were recently ahead of the Germans. Discussions about a decoupling from the Chinese market were rejected by Zipse. According to the report, the company wants to reduce risks and not put all its eggs in one basket. "That's exactly what we're doing," said Zipse, referring to BMW's equally strong presence in the US market and Europe.

Price war rages

Industry expert Ferdinand Dudenhöffer sees major challenges ahead for Germans. In the month of March alone, sales of pure combustion engines in China fell by around one percent, while sales of pure electric cars and vehicles with plug-in hybrid drive (NEV) increased by more than a quarter. According to Dudenhöffer, the Germans are also struggling with the price war that is raging on the Chinese market. "Tesla and the Chinese are ahead in price and cost competition," he says.

There is still a lot of money to be made with combustion engines in China. "But if you don't want to lose customers, you have to make significant price and margin concessions for electric cars." Western carmakers would have to recalibrate their production processes for electric cars, says Dudenhöffer. Those who simply continue with the previous pricing and production strategy will lose customers.