Volkswagen bet on Xpeng to save its China business. It’s not going to plan
When Volkswagen turned to EV maker Xpeng in 2023 to help fix its struggling Chinese business, executives believed it would be a shortcut to developing cars tailored for the fast-paced local market. However, three years later, the alliance's first product, the ID. UNYX 08 electric SUV, has failed to meet expectations. Between April and August, the SUV sold an average of 267 vehicles per month, far below the initial target of 3,622 monthly sales.
This weak debut reflects Volkswagen's struggle to revive its fortunes in China, where it once dominated the market but now accounts for only about 10% of group profits. The UNYX 08 also highlights Volkswagen's persistent issue in its China strategy. While recognizing the market's shift toward higher-end technology, the company struggled to turn its bets into commercial success.
Volkswagen sold the UNYX 08 through a limited distribution network, which compounded its challenges. Chinese customers questioned the price of the German car when comparing it to cheaper, feature-laden rivals from Xiaomi and Zeekr. Despite initial plans for high sales, Volkswagen has since cut its 2026 projection for the UNYX 08 by more than 60% to 12,300 vehicles, forecasting only 64,000 sales in 2027, which is still below the initial target.
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