Volkswagen's China Bet Stumbles as a Battery Recall and a Budget EV Pull in Opposite Directions

Volkswagen's push to reboot its Chinese fortunes through a partnership with Xpeng is running well short of the company's own targets, according to figures reported by Reuters and sourced from ThinkerCar. The jointly developed ID. UNYX 08 electric SUV averaged just 267 sales a month between April and August — a fraction of the 3,622 vehicles per month Volkswagen had originally penciled in.

The shortfall carries weight because the Xpeng tie-up, launched in 2023, was meant to inject fresh momentum into a market where Volkswagen's position has eroded sharply. China once accounted for nearly 50% of group profit; that share has since fallen to roughly 10%, Reuters reported. Co-developing a model, the early numbers suggest, does not by itself guarantee a hit.

Forecasts Cut, but the Ramp-Up Remains Steep

Volkswagen has responded by trimming its projections. For 2026, the company now expects 12,300 units of the UNYX 08 — a reduction of more than 60%. Its 2027 target has been lowered to 64,000 vehicles from 70,400. Even after the cuts, the plan still assumes a dramatic acceleration in demand that the model has yet to demonstrate.

The competitive gap is stark. Over the same April-to-August window, the UNYX 08 notched around 1,300 sales. Xiaomi's YU7 moved nearly 57,000 units, while the Zeekr 7X topped 21,000. Volkswagen Anhui's distribution network spans 166 locations, and the UNYX 08 has been carrying a 17% discount — yet volume remains far below the original blueprint.

That combination of heavy incentives and weak uptake complicates the goal of turning higher volumes into a meaningful earnings contribution. The challenge for Volkswagen is less about showroom reach than about whether the new line can stand on its own economically.

A Second Model Waits in the Wings

The stakes extend beyond a single vehicle. The UNYX 09 is slated to go on sale as soon as October, with Volkswagen documents projecting almost 4,900 monthly sales and more than 90,000 vehicles a year through 2034. Those are planning figures, not evidence of actual demand — and after the UNYX 08's slow start, investors are likely to judge the new targets by their credibility rather than their size.

Europe: A Cheaper ID. Cross, and a Costly Recall

On the home front, Volkswagen began German pre-orders yesterday for another variant of the ID. Cross. The entry-level ID. Cross Trend, fitted with a 37-kWh battery, starts at EUR 27,995 and is rated at up to 324 kilometers of WLTP range — a figure that describes the test-cycle maximum rather than a guarantee for every journey.

The model belongs to the group's Electric Urban Car Family, unveiled together in Paris on October 11 alongside the Volkswagen ID. Polo, CUPRA Raval and Škoda Epiq. Volkswagen Group cited just under 150,000 orders for the family, with fully electric models accounting for around 40% of its European order book. Those are order figures, not deliveries or earnings.

Weighing against the launch is a global recall of almost 68,000 Volkswagen vehicles, including 8,650 in Germany, over cells that could overheat — and in extreme cases catch fire — because of a supplier production fault. As an immediate measure, charging is capped at 80%.

Analysts Stay Positive, With a Caveat

The regional picture also tempers enthusiasm. Following an investor event at the Paris show, RBC analyst Tom Narayan pointed to continued difficulties in China, adding that Volkswagen does not expect stimulus measures to return there. On October 14, RBC cut its price target to EUR 115 from EUR 120 while keeping an "Outperform" rating — a stance that pairs a broadly favorable view of the stock with more cautious expectations. The cheaper ID. Cross adds to the group's sales opportunities; the China headwinds and the battery recall sit alongside them.