VW in joint venture to build 100,000 EVs a year in China
Volkswagen has confirmed it has government approval for a deal with the Anhui Jianghuai Automobile Group to produce 100,000 electric vehicles a year in China. China has recently relaxed rules on its zero emissions vehicle mandate and will accept foreign investment in car manufacturing, so long as it is used to produce electric vehicles. The deal is reportedly worth $740m.

 

As part of its new mission to become a leader in electrification around the world, German automaker Volkswagen confirmed that it received government approval in China for a new joint venture with Anhui Jianghuai Automobile Group (JAC Motor).

The deal was approved for the annual production of 100,000 all-electric vehicles.

China has a strong zero emission vehicle mandate that will force automakers to keep growing the local EV market despite the gradual phaseout of their EV incentives.

The country also agreed to relax rules when it comes to foreign investments in car manufacture as long as it is for electric vehicles.

VW is not new to those kind deals in China since it has become the biggest foreign manufacturer in the country and already has two other joint ventures – though this third one is the first exclusively for all-electric vehicles.

The deal was approved earlier this week and it is reportedly worth $740 million. Reuters reports:

“The National Development and Reform Commission (NDRC), China’s top state planner, gave a green light to JAC and VW to build 100,000 pure battery electric vehicles annually in a project worth 5.1 billion yuan ($740 million), according to a JAC Motor stock exchange filing.”

The German automaker says that it still need to be finalized and therefore, we don’t know when they aim for production to start.

Based on China’s ZEV mandate, it should be sooner rather than later since automakers need zero-emission vehicles (ZEVs) to represent 8% of new car sales as soon as 2018 and quickly ramp up to 12% by 2020. VW will be looking for this new arrangement with JAC to fulfill its mandated requirements of electric vehicles.

It’s likely that China will see new all-electric VWs before the rest of the world since the company’s new electric cars are not expected to hit the market until 2020 in Europe and the US. Though the Volkswagen group has a few EVs coming before that, like Audi has a new one for each of the next three years.