Volkswagen faces severe challenges in China, with falling sales, political missteps, and competition from local brands. BYD's rise and state subsidies have pressured VW's market share. VW's plant in Xinjiang remains controversial and unproductive. Tariffs on Chinese-made EVs further dent VW's European market prospects.

A brutal price war, sudden shifts in consumer demand and human rights issues in Xinjiang have left VW stumbling in a market it led for 40 years.