For VW, thinking blue is going green in China

Under its "think blue" initiatives, Volkswagen is planning an assault on China's green car market. The German carmaker is aiming to start local production of new energy cars in 2016 and to deploy 20 new environmentally friendly models in China by 2018. Despite persistent public apathy toward electric and hybrid cars, the company has what it takes to make further zero-emission inroads, Maik Stephan, senior executive director of new energy car promotion at Volkswagen China, said at the recent Volkswagen Media Open Day.

We sat down to discuss VW's green strategy in China.

Q: In your presentation about green cars, the focus was on the reduction of carbon dioxide emissions, a green standard adopted by the European Union. Why isn't there anything about fuel consumption, which is China's way of measuring the eco-friendliness of a car? Does it mean Volkswagen is still taking a wait-and-see approach here?

A: CO2 emission and fuel consumption are closely linked. For example, CO2 emissions of 100 grams can be converted into a fuel consumption of 4.9 liters per 100 kilometers. All our vehicles sold in China will meet the local standards.

We are definitely not in a look-and-see mood. We have been working on all kinds of green technologies — the hybrid, the plug-in hybrid, the battery electric vehicle — because we want to be flexible about our offers. Nobody knows future customer demand, so it is better for us to be fully prepared. Following the MQB modular production strategy, we are able to produce green versions for almost all of our car models, from small cars to luxury flagship sedans.

Q: Consumers have been giving green cars the cold shoulder because they are so expensive, and that prevents carmakers from pursuing economies of scale and profits. How do you think Volkswagen can escape this dilemma?

A: At this stage, for all carmakers, the green car business is an investment. There will be two trigger points to change the market dynamics. One will be the development of charging infrastructure that can solve the mileage anxiety, and the other will be a significant drop in price. Consumers may be willing to accept a green car that is 20-30 percent more expensive than a traditional one powered by the internal combustion engine, but the price gap definitely can't be more than double, which it currently is.

Q: Do you think China can achieve its target of deploying 5 million new energy cars by 2020? It seems a high-flying goal considering the rather limited progress the country has made so far.

A: It is tough, but not impossible.

Q: During German Chancellor Angela Merkel's visit to China last month, the two countries launched a program related to electric car charging. How will that affect Volkswagen's green car development here?

A: It is very important that Chinese and German carmakers find common ground in developing and installing charging poles. Without fully standardized technologies for charging, there will be no great progress in battery electric vehicles.

Q: The battery electric car and the plug-in hybrid: which one do you think has the more promising future?

A: We think, at this stage, that the plug-in hybrid is the most advanced green technology and the easiest one to use. It combines the best of both worlds. Its internal combustion engine is a guarantee of a stable source of power, which puts consumers at ease. Its electric drive mode, which can support a maximum mileage of 50 kilometers, makes the car really fun to drive. The electric motor boost enables thrilling acceleration and a very sporty driving experience. And the car can be recharged simply at home, with no need for charging infrastructure.

By comparison, the battery electric vehicle is more environmental friendly. But, today we have to compromise between driving range, driving experience and performance because the battery is too heavy and expensive.

As the price of the battery goes down, the price drop may lead to the democratization of battery electric cars in the future.