Berlin (Reuters) - Volkswagen wants to step up the pace of development in the face of increasing competition for e-cars in China.

Chinese manufacturers only need about two and a half years to develop a new vehicle, said China boss Ralf Brandstätter at a media roundtable in Berlin. Volkswagen takes almost four years on average. "Due to our quality standards, we deliberately take a little more time, but we can become faster in some areas." This is to be achieved by hiring more developers at Volkswagen and its software subsidiary Cariad and pooling expertise at the plant in Anhui province in the south-east of the country. Concepts from Chinese suppliers are to be incorporated at an earlier stage of development. "We are focusing on more local innovations, developed in China for China."

Europe's largest car manufacturer has been present on the Chinese market for almost four decades and leads the competition for combustion engines. Lower Saxony generates a large proportion of its profits in China, which it needs for its move into e-mobility and digitalization. However, the Group is no longer talking about market leadership, but about taking a leading role in the world's largest car market. This is because Chinese manufacturers have caught up and are putting rivals VW, BMW and Mercedes under massive pressure when it comes to electric cars. The market leaders include BYD and the US electric car manufacturer Tesla.

Volkswagen wants to take advantage of the tough competition. China is "like a huge fitness center" for the automotive industry. "We are consistently adapting to this and accepting the challenge," said Brandstätter. "We have to hold our ground now - also in order to maintain our global position in the face of Chinese competition." This affects not only Volkswagen, but the entire German automotive industry.

Brandstätter referred to the Chinese government's plan to become a leader in networked and autonomous vehicles, so-called Intelligent and Connected Vehicles (ICV). The Chinese automotive industry would benefit from this. Volkswagen wants to be part of this development. In the debate about excessive economic dependence on China, Brandstätter spoke out against the West decoupling itself from the People's Republic. "We must remain in exchange, especially now. Close economic relations help us to do this."

At a global level, Volkswagen is currently diversifying its markets in order to reduce dependencies. For example, the Wolfsburg-based company is investing heavily in North America and is also securing some of its raw material requirements for electric cars there. A battery cell factory is also to be built in the region in the foreseeable future. The USA is using massive tax breaks to attract technologies for renewable energies such as electric cars.

Brandstätter announced a visit to the Chinese province of Xinjiang in February, where Volkswagen operates a plant together with the state-owned company SAIC. The region in northwest China is home to the Muslim Uyghur minority, which is oppressed by the Chinese state. Other companies have been punished by Chinese customers with hostility on social media and boycotts for taking a critical stance on this issue. "We will do everything in our power to ensure that there are reasonable working conditions at this plant. Just like in all other plants," said Brandstätter. VW is also checking its supplier network. "We have no evidence of human rights violations or forced labor."

MODEL RANGE IS BEING EXPANDED

In order to maintain its position in China, Volkswagen wants to expand its model range upwards and downwards - upwards with the ID.7 electric Passat and downwards with, for example, a small saloon or an SUV below the ID4. An ID.2 in the form currently being considered for Europe is not currently planned for China.

The Group expects the Chinese passenger car market to grow by four to five percent to around 23 million vehicles in 2023.

(Report by Jan C. Schwartz and Victoria Waldersee; edited by Sabine Wollrab. If you have any questions, please contact our editorial team at berlin.newsroom@thomsonreuters.com (for politics and the economy) or frankfurt.newsroom@thomsonreuters.com (for companies and markets).)