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SHANGHAI (dpa-AFX) - German automakers want to catch up in China's fiercely competitive electric car market. The electrification strategy for the Chinese market is being "driven forward at full speed," Volkswagen said on the occasion of the start of the international auto show in Shanghai on Tuesday. VW will accelerate its decision-making and development processes in China, group CEO Oliver Blume stressed.

Against the backdrop of fierce competition, the Wolfsburg-based company announced its intention to expand its investments. Around one billion euros are to be invested in setting up a new development, innovation and procurement center for fully connected electric cars in the Chinese city of Hefei. At the new company, development times for new products and technologies are to be cut by around 30 percent.

Volkswagen and the German auto industry as a whole are in a difficult situation in China. Around one in four cars sold in China is already electric. But unlike with internal combustion engines, many German brands have hardly played a role in electric cars in China so far. Domestic brands dominate there. The VW brand recently even lost the title of largest carmaker in China, which it had held for decades, because its domestic competitor BYD overtook it thanks to great successes in the e-segment.

Volkswagen had scheduled the world premiere of its new ID.7 for the eve of the show. The Wolfsburg-based company has high hopes for its new electric sedan in China. Mercedes, for its part, showed an all-electric version of its luxury Maybach brand for the first time in Shanghai. "We are confident that we will see significant growth rates," Mercedes board member Markus Schäfer said Tuesday, referring to the e-car business on the sidelines of the auto show.

BMW believes it is well positioned in the Chinese market. The company is very happy with its position and is optimistic about the business, Group CEO Oliver Zipse said at the show. In China's fiercely competitive market for electric cars, BMW is doing better than all of its German premium competitors, he said. In the first quarter alone, sales of electric cars in China tripled to around 19,800, he said. This gives the Group a market share of around ten percent in the premium electric vehicle segment.

Unlike the premium market as a whole, however, BMW does not hold a leading position in electric cars. Tesla and the Chinese brand Nio, for example, have recently been ahead of the Germans in this area.

Audi wants to catch up in its electric car business, which has been sluggish so far. "We continue to see the Chinese market as positive," Audi CEO Markus Duesmann said Tuesday on the sidelines of the auto show. Electric cars already accounted for 25 percent of sales in the Chinese car market recently. However, Audi still sells hardly any vehicles in this segment and has only a small market share. According to Duesmann, Audi wants to significantly expand its vehicle range. Ten pure e-models are planned in the next three years alone, he said. "This will significantly improve our position," Duesmann said. Audi's ambition is to play a "very significant role" in the premium electric car segment, he added.

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

There is still a lot of money to be made with combustion engines in China, he added. "But if you don't want to lose customers, you have to make significant price and thus margin concessions for electric cars." Western automakers would have to recalibrate their production processes for electric cars, Dudenhöffer said. Those who simply continue with the current price and production strategy will lose customers./jpt/DP/jha