Volkswagen Negotiating in China to Manufacture Electric Cars
Volkswagen AG has begun exploring the possibility of a joint venture in China to manufacture electric cars with a company that is state-run, part of the carmaker’s aggressive push into the production of electric vehicles, as the automaker tries to resolve the scandal over its emissions cheating.
The carmaker based in Germany signed with China Anhui Jianghuai Automobile, a memorandum of cooperation for a possible partnership, said the two companies in statements released by each.
The Chinese company said the two companies would have equal ownership within the proposed joint venture and were hoping to reach a formal accord within the next five months.
Matthias Muller the Volkswagen Group chairman said the company is aiming to be at the front of e-mobility and was looking forward to exploring all its options to establish a mutually beneficial and close partnership with JAC.
The company has targeted its sales at 1 million electric vehicles per year across the globe before 2025.
Volkswagen derives over one third of its global sales of vehicles from China following three decades of having operations in the country.
Currently it has two car manufacturing partners in China. Under rules of the Chinese government, foreign automakers must join forces with a local partner to make cars.
China also limits foreign automakers to only two Chinese partners to make vehicles that are gasoline powered. At the same time, the limit is not applicable to the making of electric cars, but the majority of foreign businesses choose to make vehicle that are alternative energy with existing partners.
Officials from the two partners of VW in China did not release statements. Analysts said that VW might be able to reach a deal that is more favorable with Jianghuai than with its current manufacturing partners.
General Motors is planning to launch 10 or more alternative energy vehicles with its partners in China, Wuling and SAIC, before 2020. Nissan Motor and Dongfeng Motor Group its partner launched a car that is all electric during 2014 in China.
The announcement on Wednesday follows the purchase by Volkswagen of a stake of 16.6% in Navistar International, the truck maker based in the U.S.
Jianghuai is in a province in east China and is major maker of trucks in the country. It also makes conventional as well as electric cars.
Earlier in 2016, Jianghuai signed an agreement worth $1.5 billion with NextEV Co a startup company of electric cars backed by Sequoia Capital and Tencent Holdings to develop vehicles that are electric.