Volkswagen will invest €10bn ($11.8bn) to develop new-energy vehicles (NEVs) in China by 2025, its China head announced Thursday. The European carmaker will launch 40 locally produced vehicles in China, Jochem Heizmann told reporters at the Guangzhou Auto Show. Production of electric vehicles will begin during the first half of next year with Volkswagen’s new joint venture partner Anhui Jianghuai Automobile Group (JAC Motors). The move comes as China moves to require automakers to reach production quotas for electric vehicles.
A delayed carbon trading scheme would also require carmakers to buy and sell carbon credits tied to the production of electric vehicles. Under the scheme, the rollout of which was scheduled for 2018, EVs need to account for up to 8 per cent of vehicle sales in China. The new rules were delayed to 2019 after protests from Germany and other countries. Some auto executives also told Chinese industrial planner that they might have to reduce overall output to meet the target, according to two people familiar with the discussions.
The rules will not be enforced until 2020. VW will initially use JAC platforms to ramp up electric car production to meet the government’s quota. “The JAC joint venture is an interim solution to hit the NEV quota but will be phased out once VW can reach it with its own technology,” says Jochen Siebert at JSC Automotive, a consultancy in Shanghai.