Volkswagen, JAC Builds $750 Million EV Plant In China

Volkswagen logos are pictured during the media day of the Salao do Automovel International Auto Show in Sao Paulo
Volkswagen logos are pictured during the media day of the Salao do Automovel International Auto Show in Sao Paulo, Brazil November 6, 2018. (Photo: REUTERS/Paulo Whitaker)

Volkswagen's joint venture with Anhui Kianghuai Automobile Co, Volkswagen JAC, is willing to spend 5.06 billion yuan to build a new electric car plant in Hefei, China. The latest media report said that the new factory is capable of producing 100,000 BEVs every year.

The new plant will surpass the two other upcoming plants by joint ventures with FAW and SAIC at 300,000 per year. The Volkswagen JAC is currently working on new BEV projects which is intended to be released in China as its first all-electric model in 2021. Recently, JAC showcased one of its cars, the JAC iEV S4, in Shanghai.

According to reports, the environmental permit was already approved for the production of the electric cars. Reuters' report based on statements from local authorities confirmed the news. The report also cited that a spokesman for the joint venture said that the approval is orderly advancement of the project. The spokesman also said that they will launch its first electric model this year. The venture's E20X is a modified offshoot of JAC's iEV7S compact electric car. The new model will run through the SOL brand which was introduced at Auto China in April 2018. SOL was created to sell EVs in China.

Volkswagen's joint venture with JAC started the foundation for research and development center back in winter which focuses on electrification, connectivity, and autonomous driving. The ground-breaking ceremony for the proposed plant took place two weeks after Volkswagen, JAC and Seat inked a statement of intent to develop electric vehicles. The partnership plans to launch its new Seat brand in China in 2021. Seat joint the China JAC-Volkswagen joint venture in mid-2018.

Reports proved that the ties between Volkswagen and JAC will continue to prosper. Recently, Volkswagen announced that they are examining the possibility of purchasing a large stake in the Chinese joint venture partner and they had acquired the services of Goldman Sachs to serve as a consultant for the purchase. Volkswagen had relied entirely on its partnerships with FAW and SAIC until now. Volkswagen is also setting up an electric car plant in Shanghai with SAIC to build Audi vehicles from 2020.

The company plans to launch no less than 30 new vehicle models with electric and plug-in hybrid drivers on the Chinese market within two years. Half of their production plan will be locally produced in China and the other half will be imported. The partnership plans to produce around 400,000 electrified vehicles by 2020 until it reaches 1.5 million by 2025.

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