On Friday, Volkswagen (VOWG_p.DE) announced that it will develop a new platform for entry-level electric vehicles in China and use more local components to lower costs. The announcement comes as the German company seeks to regain lost ground in the world’s largest auto market.

During a visit to the company’s new electric vehicle development and procurement center in the city of Hefei in central China, China chief Ralf Brandstaetter explained to reporters that the new architecture, which will be referred to as the A-Main Platform, will be tailored specifically to the preferences of Chinese consumers about the battery, electric drive, and electric motor.

According to him, Chinese consumers shopping for brand-new automobiles tend to be younger, more proficient in technology, and interested in receiving an immersive digital experience from their vehicles.

Derived from the so-called modular electric drive matrix (MEB), the present electric-only platform that Volkswagen has been using since 2019, he noted that it will predominantly employ Chinese suppliers and should be ready for market in 2026, which is a third faster than the development timelines of prior platforms.

The business has stated that it intends to bring an additional ten electric vehicle models to the global market by 2026 and reduce the time it takes to bring new models to market from four years to something closer to the average of 2.5 years for its Chinese competitors.

According to Brandstaetter, Volkswagen must find ways to cut expenses to compete in the “price-sensitive” Chinese market.

“When the amount of (EV) sales increases, we must be profitable for our business to be sustainable. Because of this, we are at the forefront of technological advancement, speed, and cost-effectiveness.

Ludger Luehrmann, the chief technology officer of the Volkswagen Group China Technology Company (VCTC) in Hefei, which is developing the platform, stated, for instance, that the company was able to lower the price of its dashboard displays by 37% after switching from a global supplier to a Chinese one. VCTC is located in Hefei.

Due to the fierce rivalry with local EV producers and its significant reliance on gasoline cars, Volkswagen was dethroned as the best-selling car brand in China by BYD (002594. SZ) toward the end of the previous year. Sales of gasoline vehicles have been on the decline in the country.

Significant discounts helped raise its monthly sales to roughly 10,000 throughout July to October, up from an average of 2,200 per month in the previous year, according to statistics compiled by the industry. The ID.3, the company’s best-selling electric vehicle, placed 22nd among EV models in China in sales this year.

MODELS DESIGNED FOR BEGINNERS

Volkswagen is trying to broaden its product range in China to attract customers in the entry-level and mid-level segments of the electric vehicle (EV) market. This is because the price of Volkswagen’s present offering is higher than that of many Chinese electric-only competitors.

To compete with rivals in a market segment where gasoline cars currently dominate, the company intends to produce four models on the new platform with prices ranging from 140,000 yuan ($19,400) to 170,000 yuan.

He said that Volkswagen’s joint ventures with SAIC (600104. SS) and FAW would be the ones to produce the automobiles. Volkswagen committed around 1 billion euros ($1.1 billion) to constructing VCTC, which the company deems essential to its ‘China for China strategy’ and would eventually employ more than 2,000 people.

The center’s functions include tying together the development projects of Volkswagen’s three joint ventures in China with SAIC, FAW, and JAC Motors, as well as coordinating procurement to incorporate suppliers at an early stage.

As a result of the center, “time-consuming coordination across time zones with developers in Germany is no longer necessary,” according to Brandstaetter.

“We will increase the efficiency of our development processes and be able to shorten the time it takes to bring products to Chinese customers by 30%, while ensuring we are catering to their specific needs.”

In July, Volkswagen agreed to expand its line of electric vehicles with the Chinese electric vehicle manufacturer Xpeng Inc (9868. HK). As part of that agreement, the company is developing two new models, both of which will be aimed at consumers with a mid-level budget and manufactured on an Xpeng platform from an earlier generation. These cars are scheduled to go into production beginning in 2026.