Volkswagen Plans to Produce Electric Cars for Chinese Market

Sep 08, 2016 05:17 AM EDT | Jomar Teves

Volkswagen AG is opening itself on a joint venture to make electric cars in China with a state-run company, as part of its aggressive push into electric-vehicle production. These are being done by the German carmaker amid its attempts to resolve its emissions-cheating scandal.

A Deal with China

The German carmakers signed a memorandum of collaboration with China Anhui Jianghuai Automobile Co. for a potential partnership, the companies said in separate statements. Jianghuai said the two will be equivalent proprietors of the joint venture, and hope to achieve a formal agreement within five months.

"As we aim to be at the forefront of e-mobility, Volkswagen Group is looking forward to explore all options to set up a close and mutually beneficial partnership with JAC," Volkswagen CEO Matthias Müller said.

The company is targeting sales of a million electric vehicles a year worldwide by 2025.

Volkswagen's Chinese Partners

Volkswagen, which infers more than 33% of its worldwide vehicle sales from China following three decades of operations there, currently has two car-making partners in the nation: SAIC Motor Corp. in Shanghai and FAW Group Corp. in the upper east. Under government rules, foreign car makers must tie up with local partners to producers. China limits foreign car companies to two local partners to make gas-fueled vehicles.

While the limit doesn't apply to electric cars, most foreign companies produce alternative-energy vehicles with their current partners. Analysts say Volkswagen might have the capacity to strike a more favourable deal with Jianghuai than its present accomplices.

"You may get a better agreement from a company who values your technology more. SAIC and FAW may already have [electric-vehicle] technologies and do not need VW as much as JAC," Bill Russo, a Shanghai-based managing director at consultancy Gao Feng Advisory Co. General Motors Co. said.

See Now: OnePlus 6: How Different Will It Be From OnePlus 5?

© 2021 Auto World News, All rights reserved. Do not reproduce without permission.
Get the Most Popular Autoworld Stories in a Weekly Newsletter

Join the Conversation

Real Time Analytics