(Bloomberg) -- Volkswagen AG will roll out a new digital architecture to make its electric vehicles more appealing in China, where it has fallen behind local champion BYD Co.   

The so-called China Electrical Architecture — developed with VW’s Chinese partner Xpeng Inc. — will allow advanced features such as autonomous driving to be continuously upgraded over-the-air, the German automaker said Wednesday. However, the first cars to use the new platform won’t hit the market until 2026, while such features and connectivity are already common place in many Chinese EVs.  

“By expanding our partnership with Xpeng and consistently integrating with China’s industrial ecosystem, we will align our products even faster to the needs of Chinese customers,” Ralf Brandstätter, who runs VW’s China business, said in the statement. 

VW is facing difficulties in key market China, and last month said it’s willing to give up market share in the world’s biggest auto market this year and next to improve the business in the long term. It last year ceded its mantle as China’s top-selling car brand to BYD, before striking a $700 million deal with Xpeng — a sign of China’s rapid rise to dominate the global transition to EVs. 

To help win back customers, VW has adopted what it calls an “In China, For China” strategy, aimed at developing the kind of tech-laden cars Chinese customers want. For example, tech giant Xiaomi Corp. said it received tens of thousands of orders for its first EV — 215,900 yuan ($29,820) SU7, which comes with AI-assisted automated parking, a 7.1 inch rotating dashboard, heads-up display and two seat-back extensions that allow for the mounting of two tablet devices. 

VW’s new platform will be used in Chinese-made cars, starting with four entry-level compact cars in 2026. It will also be used in two VW-badged vehicles being developed with Xpeng and targeting the mid-range segment, starting with a sport utility vehicle in 2026. The automaker said the new platform will also reduce the complexity of electronic control systems, cutting up to 30% of electronic control units and helping lower costs. 

To demonstrate how crucial the Chinese market is to VW’s fortunes, the automaker will exhibit 44 models from across its brands at the Beijing Auto Show, which starts next week. Almost half will be EVs, and there will be six world premieres, Brandstätter said.

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