The move is aimed at tapping the growing Chinese demand for New Energy Vehicle (NEV).
In what is possibly the first venture for Volkswagen AG’s partnership with SAIC Motor Corp Ltd, a Chinese company, the joint venture is on track to commence building a $2.5 billion new energy an vehicle (NEV) plant in Shanghai.
The plant will build Volkswagen’s Audi-branded cars.
This plant assumes significance since it underscores Audi’s plan to diversify production of its cars in China from its long-standing local partner – China FAW Group Corp Ltd. The building of the plant had faced delays midst resistance from local dealers.
SAIC Volkswagen stated, the new plant will have an annual capacity of 300,000 and will begin production from 2020. For the period of January 1, 2018 to September 30, 2018, Audi sold 481,387 vehicles in China.
In late 2016, Audi unveiled a plan to bolster ties with SAIC and earlier this year, it bought a 1% stake in the SAIC Volkswagen venture, which paved the way for the joint venture to produce and sell Audi cars.
Incidentally, Volkswagen currently gets a larger proportion of the proceeds from the 50-50 tie-up with SAIC than from its 40 percent stake in the venture with FAW.
In a statement, SAIC Volkswagen stated the plant would cost $2.5 billion (17 billion yuan) and would make Skoda, Audiand VW cars.
The new plant is aimed at tapping the growing Chinese appetite for NEVs – a category which comprises of plug-in electric hybrid vehicles and electric battery cars.
($1 = 6.9314 Chinese yuan renminbi)