Foreign Auto Brands Adjust Electric Vehicle Strategies Amid Market Challenges

The slogan of "full electrification" is being abandoned by some foreign car manufacturers. Klaus von Moltke, Senior Vice President of Engine Production at BMW Group, stated in a recent interview that internal combustion engine technology remains a crucial source of stable cash flow and funding support during this transitional period. Notably, Audi's CEO, Gernot Döllner, confirmed that the company has officially withdrawn the plan set by previous management to stop the research and sales of internal combustion engine vehicles by 2033. Döllner mentioned that Audi will no longer set a clear termination timeline. Previously, several luxury brands, including Mercedes-Benz and Volvo, announced adjustments to their electrification plans. Foreign brands are hesitant towards "full electrification," not resisting the trend but strategically adjusting based on market demand, technological development, and their own capabilities. For most car manufacturers, the electrification business still struggles to achieve profitability. They aim to retain and optimize internal combustion engine technology to ensure a smooth transition, reduce risks, and allocate more time and resources for the development and application of electric technologies. The unwillingness of automotive giants to abandon the internal combustion engine has become a common choice among several luxury brands. Audi had a clear electrification timeline: it planned to stop developing internal combustion engine technology by 2026, cease launching new fuel models after 2026, and stop developing and selling fuel vehicles by 2033. However, this plan has quietly been shelved. Döllner revealed that Audi will launch a new series of internal combustion engine and plug-in hybrid vehicles between 2024 and 2026, which will provide more flexibility in the next decade before reassessing the market's evolution. Similarly, Mercedes-Benz has also shifted its strategy. In 2021, it announced a plan for full electrification in major markets by 2030. However, in February 2024, it postponed its target of 50% electric vehicle sales by 2025 and will continue to update its internal combustion engine product lineup over the next decade. Mercedes-Benz Group Chairman Ola Källenius acknowledged that the company is "adjusting its course" to retain internal combustion engine models longer than initially planned. Volvo has also revised its electrification goals, abandoning its aim to sell only pure electric vehicles by 2030. Due to changing market conditions and consumer demand falling short of expectations, Volvo's new goal is for plug-in hybrids and pure electric models to account for at least 90% of its sales by 2030. Meanwhile, the brand is accelerating cost reductions and resource integration. Following Volvo's announcement of global layoffs of 3,000 employees, staff in China received layoff notifications, mainly affecting those at the Shanghai R&D center, including positions in engineering, R&D, and supply chain management, with compensation based on N+3 months' salary. Porsche announced in July 2024 that it would abandon its previous target of 80% electric vehicle sales by 2030, deeming this target overly ambitious. In March of this year, Porsche reiterated that it still sees electrification as a core future technology but will extend the transition period while continuing to offer a product mix of internal combustion engines, pure electric, and hybrid models. Bentley's strategic adjustments have also drawn attention. The company had announced plans to sell only plug-in hybrid or pure electric vehicles by 2026 and shift fully to electrification by 2030. However, under the leadership of new CTO Frank-Steffen Walliser, Bentley's electrification strategy has been adjusted. Walliser stated that Bentley has adjusted its commercial strategy based on positive customer feedback on plug-in hybrid models, extending the lifecycle of Bentley's plug-in hybrid models from 2030 to 2035. The Chinese market is facing downward pressure. Notably, amid the ongoing electrification efforts, foreign brands are generally experiencing a decline in sales in the Chinese market. In 2022, BMW's sales in China were approximately 792,000 units, a year-on-year decline of 6.4%. After a brief sales recovery in 2023, BMW's sales in China significantly dropped by 13.4% to 714,500 units in 2024, making it the luxury brand with the largest decline among the BBA group. In the first half of 2025, BMW's sales in China were 317,900 units, a year-on-year decline of 15.5%; second-quarter sales were 162,700 units, down 13.7%, continuing the downward trend. "BMW is facing challenges related to consumer sentiment and dealer networks in China, but this is a common issue across the industry, and BMW is actively planning a response," stated the board member responsible for customer, brand, and sales at BMW Group. Continuous sales fluctuations have made BMW more cautious about the pace of its electrification transition. After all, internal combustion engine models currently still bring considerable profits, which can fund the research and investment in electric technologies. If the company pushes too aggressively towards electrification, leading to a significant drop in internal combustion engine sales while electric models do not fill the market gap in time, it will face immense operational pressure. In fact, luxury brands are generally under pressure from declining sales in the Chinese market. Data shows that in the first half of 2025, Porsche's global sales were 146,000 units, a year-on-year decrease of 6%; of which, sales in the Chinese market fell by 28%. In its largest market, North America, sales increased by 10% year-on-year. Regarding the poor performance in the Chinese market, Porsche CEO Oliver Blume stated at the 2024 financial report meeting that this was mainly due to rapid changes in the Chinese market, where Porsche failed to keep up with shifts in consumer demand. "China's annual demand has significantly decreased, and the situation is severe. China is undergoing structural changes, and our electric vehicle development has been slower than anticipated a few years ago." China has become a "key battleground" for electrification. As the largest automotive market globally and one of the fastest-growing in terms of electrification, China's large consumer base and complete industrial chain significantly influence the strategic layout of global automotive brands. To remain competitive in the era of electrification, foreign brands must pay attention to the demands and changes in the Chinese market. In China, foreign brands like BMW and Audi are still accelerating their electrification and intelligentization transitions while collaborating with local enterprises to precisely meet the unique demands of the Chinese market. For example, Audi FAW New Energy is Audi's first enterprise dedicated to producing pure electric vehicles in China, with its Changchun factory set to commence production in December 2024. In 2019, Audi became the first luxury automotive brand to partner with Huawei, integrating customized Huawei technology to provide cutting-edge intelligent solutions to customers. The FAW Audi Q6L e-tron has become the first luxury brand vehicle equipped with Huawei technology. Additionally, Audi has partnered with SAIC to create a smart digital platform specifically designed for the Chinese market. In terms of intelligentization, Chinese consumers have a particularly strong demand for smart driving and smart cockpit features. Audi's cooperation with Huawei is a typical example of how foreign brands can rapidly enhance vehicle intelligence through partnerships with Chinese tech companies. This cooperation model not only helps foreign brands quickly access advanced intelligent technologies but also leverages local tech companies' understanding of the domestic market to better adapt to the competitive environment in China. Through collaboration, foreign brands can combine world-leading automotive manufacturing technologies with China's intelligent technologies, launching products more aligned with Chinese consumer demands, thus increasing market share. Furthermore, although the overall process of electrification among ultra-luxury brands has been delayed, their electrification efforts in the Chinese market remain the fastest. Bentley's Chairman and CEO Frank-Steffen Walliser stated, "The first pure electric Bentley model is expected to be introduced to the Chinese market in 2027. This will be a more compact all-new SUV, creating a new market segment." Walliser also revealed that Bentley's headquarters in Crewe, UK, is advancing a ten-year investment plan totaling 3 billion euros. As one of the largest investments in the brand's history, Bentley is comprehensively promoting the transformation of this 85-year-old plant towards the production of pure electric models. It can be said that the Chinese market is a key battleground for foreign brands' electrification transitions. They are actively advancing electrification and intelligentization through partnerships with local enterprises, increasing localized production and R&D investments, and launching products that meet the demands of the Chinese market. Despite adjusting their stance on internal combustion engines globally, the pace of electrification in the Chinese market remains steadfast.