Volkswagen's Bet on Xpeng to Save Its China Business Isn't Going to Plan

3-line summary

• Volkswagen partnered with Chinese EV maker Xpeng in 2023 to speed up development of China-tailored models, producing the electric SUV ID. UNYX 08 and sedan UNYX 09; the UNYX 08 sold an average of just 267 units a month from April to August, far below Volkswagen's 2026 target of 3,622 per month, while rivals Xiaomi YU7 and Zeekr 7X sold roughly 57,000 and over 21,000 units respectively in the same window.
• Volkswagen has cut its 2026 sales forecast for the UNYX 08 by more than 60% to 12,300 units and lowered its 2027 forecast to 64,000, down from original 2024 plans of 32,600 and 70,400 units; the company is now advertising discounts of 17% off the roughly $34,260 launch price, and sold through a small new dealer network under its Volkswagen Anhui EV subsidiary-now at 166 outlets-instead of the more than 3,000 existing joint-venture dealerships of FAW and SAIC.
• Volkswagen's China market share has fallen from about one in five cars sold in 2019 to roughly 10% in the first eight months of 2026, with the region's profit contribution dropping from nearly half of group earnings to about 10%; the company lost the top sales spot to BYD in 2023, is undertaking its largest restructuring in 89 years, and has seen separate alliance talks with BYD and Leapmotor fail to materialize, alongside legal disputes over its flying-car venture and a charging joint venture.

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