Deals - Asia

Volkswagen plans electric vehicle plant with JAC in China: local government

BEIJING (Reuters) - German automaker Volkswagen AG’s joint venture with China’s Anhui Jianghuai Automobile Co (JAC) plans to invest 5.06 billion yuan ($750.8 million) in a new electric car factory in eastern Hefei city, according to local authorities.

FILE PHOTO: A man uses phone under a Volkswagen logo at the Shanghai Auto Show, in Shanghai, China April 20, 2017. REUTERS/Aly Song

A document posted online by the Hefei Economic and Technological Development Area on Monday showed that Volkswagen and JAC had obtained approval from environmental authorities to build a plant capable of producing 100,000 all-electric battery cars a year.

Volkswagen Group China on Thursday confirmed the numbers that had been included in previous official documents and said JAC-Volkswagen would launch its first model soon.

A spokesperson for the joint venture confirmed plans for the plant, saying the approval represented an “orderly advancement of the project”, and the venture’s first electric model, the E20X, will be launched this year.


The German company, China’s largest foreign automaker with sales of 4.21 million cars on the mainland and Hong Kong in 2018, has pledged to ramp up production of zero-emission vehicles as part of its growth strategy in the country.

Volkswagen has said it plans to produce more than 22 million electric cars in the next 10 years, with over half of them built in China. It plans to launch 14 new energy vehicle models in China this year.

VW’s joint venture with JAC, approved in 2017, said last year it would launch a research and development center. It also planned to introduce the SEAT brand to China by 2020-2021.

Reuters reported this month that Volkswagen is in talks with South Korean battery maker SK Innovation to accelerate electric vehicle development.

China’s car market, the world’s largest, contracted for the first time last year since the 1990s. However, the new energy vehicle segment is still growing rapidly and NEV sales jumped 61.7 percent to 1.3 million units in 2018.

The China Association of Automobile Manufacturers has said new energy vehicle sales could hit 1.6 million units this year.

Volkswagen has started building a $2.5 billion new energy vehicle plant in Shanghai with SAIC Motor Corp Ltd, which will make VW’s luxury Audi AG brand cars.

SAIC Volkswagen said the new plant would have an annual capacity to make 300,000 cars and begin production from 2020.

Reporting by Yilei Sun and Norihiko Shirouzu in Beijing; Editing by Christopher Cushing and Darren Schuettler