Daily Management Review

Volkswagen to produce electric vehicles in China


German carmaker Volkswagen AG signed a protocol of intent with China's Anhui Jianghuai Automobile Co. (JAC), on production of electric vehicles in China.

Volkswagen is counting on a long-term partnership with Anhui Jianghuai, says message of the German company. The parties are negotiating a joint venture, and intend to enter into a formal agreement in five months. Each company will own 50% of the joint venture.

"We aim to take a leading position in production of electric vehicles. Volkswagen Group will examine all options in order to establish close and mutually beneficial cooperation with JAC", - said Executive Director of Volkswagen Matthias Müller. The company expects to annually sell 1 million EVs worldwide by 2025.

Volkswagen entered the Chinese market in the late 1980s. Now the concern produces cars in China in cooperation with two Chinese partners - SAIC Motor Co. and FAW Group Co.

In 2015, Volkswagen sales in China totaled 3.55 million vehicles, i.e. more than a third of international scope.

Earlier in February, the German carmaker declared an intention to invest more than 4 billion euro in China in 2016, particularly in the production of SUVs and hybrid vehicles in the country, said the head of the Chinese division VW Jochem Heizmann.

VW planned to start producing hybrid car Audi A6 in China in the second half of this year. In the next five years, the German company intends to introduce 15 models of cars that use alternative fuels.

The investments planned in China are similar to levels of the previous years, and comply with plan of VW’s former CEO Martin Winterkorn, who resigned in September last year as a result of the "diesel" scandal.

Earlier, VW announced plans to cut costs by 1 billion euros to soften consequences of the scandal. Nevertheless, disinvestment will not affect the Chinese unit. "We do not intend to change the program of investment in China, neither in this year or in the following years", - Bloomberg quoted Heizmann.

In addition to hybrid cars, VW intends to begin manufacturing of 10 SUV models in China in 4 years. Concern is also looking for opportunities to expand production of commercial vehicles in China business.

Trading in JAC shares in Shanghai on Wednesday was suspended due to the leaked information about upcoming agreement with Volkswagen. VW’s shares rose in Frankfurt by 1.3%.

Meanwhile, Chinese Zotye group announced start of sales of its premiere of this year. This is an urban crossover Zotye Damai X7 SUV, which almost completely copies Volkswagen CrossBlue Coupe-Concept, presented by the German company at the end of 2015.

The new items are distinguished by a variety of engine versions: Zotye Damai X7 SUV will be available with three versions of the turbocharged engines: 1.5-liter, 1.8-liter and 2.0-liter; 150-hp, 170 hp and 190 hp, respectively. Regardless of engine size, the crossover will be available with automatic and manual transmission.

Minimum price for Zotye Damai X7 SUV will be 78 thousand yuan. A fully equipped vehicle will cost almost 154 thousand yuan.

source: wsj.com, carnewschina.com