Volkswagen, a German automaker, is spending $1 billion developing electric cars in China and producing a vehicle aimed at the upper end of the market.

In Hefei, a city close to Shanghai that has developed into an auto powerhouse and is home to Nio’s China office and other businesses, the company said this week at the Shanghai auto show that it is investing roughly 1 billion euros (roughly $1.1 billion).

According to the China Ministry of Commerce, German investment in China increased by about 61% in the first quarter compared to the same period last year. In the first three months of the year, total foreign investment in China increased by 4.9% year over year to 408.45 billion yuan ($59.33 billion).

According to a press release from the carmaker, a new firm dubbed “100%TechCo” will run Volkswagen’s new business center, which is scheduled to open in 2024 with more than 2,000 staff members.

Marcus Hafkemeyer, who serves as Volkswagen’s chief technology officer in China, will serve as the new company’s CEO, according to the press release.

Volkswagen claims that 100%TechCo can cut the time it takes to develop new products and technologies by around 30% by merging its three joint ventures in China and enlisting local suppliers early in the process.

Volkswagen also unveiled its brand-new ID.7 car this week. This fall will see the introduction of the all-electric car in China and Europe, with North America following a year later.

According to Volkswagen, cars for Europe and North America will be made in Germany, while those for China will be made locally.

Although the German manufacturer withheld a pricing, it claimed that the ID.7 is its first entirely electric vehicle “for the upper mid-size class.”

The biggest market for electric vehicles worldwide is China. According to the China Passenger Car Association, luxury car sales increased by 17% year over year in March, outpacing passenger car sales’ 0.3% growth.

According to a release, the ID.7 will have a range of up to 700 kilometers (435 miles) and have features like help for changing lanes on motorways and parking.

The sedan also has a “augmented reality head-up display”—a technology that enables the driver to see projections of information about the car and the road ahead. Volkswagen’s electric ID.3 and ID.4 vehicles were the first to use the technology.

According to the business, the ID.7 will have a panoramic sunroof with voice control and a touch-screen-like feature for adjusting transparency.

(Adapted from CNBC.com)

Categories: Economy & Finance, Strategy, Sustainability