VW China has increased its share in the electric vehicle joint venture JAC Volkswagen to 75% and obtained joint venture management rights. At the same time, it has obtained a 26% stake in the EV battery maker Gotion High-Tech to support the future electrification of the group. The total investment of the above two projects is estimated to be about €2 billion.
The plant, which has an estimated investment of US$3.06 billion (20 billion yuan) from both Volkswagen and JAC Motors, will be finished by the end of 2022, and its first vehicle will roll off the assembly line in 2023.
Volkswagen has set a goal of selling 1.5 million electric cars and plug-in hybrids a year in China by 2025.
Globally, it expects to sell 19 million electric cars based on its MEB platform by 2030. In China, its other two joint ventures, FAW-Volkswagen and SAIC Volkswagen, have built MEB plants with a combined annual capacity of 600,000 vehicles.
Source: China Daily Read The Article
PSR Analysis: The electric car will be the central strategy for VW China in the future. The main reason for this change comes from the new EV strategy of China. The National Development and Reform Commission (NDRC) has announced a step-by-step plan to liberalize the restrictions on the share ratio of auto joint ventures, allowing foreign-funded enterprises to hold more than 50% of the shares in the joint venture. The introduction of this policy undoubtedly affected the decision of Volkswagen Group.
Volkswagen has maintained a good reputation in China for years and this kind of change can help VW speed up the development of the EV market. The other purchase of the EV local cell company Gotion can help them to establish their independent key powertrain both from the technology and cost.
The cost of the EV cell is the biggest component to the EV company, which is a problem for EV products compared with the traditional passenger car. In order to keep down costs of the EV cell, Tesla change their cell supplier from Panasonic to the local supplier CATL, who is also the supplier of BYD. The investment of Gotion will help VW to speed up the process of EV strategy in China.
Major changes are taking place in the automobile industry every day. Some new players, such as Tesla, BYD and some other new players have seized the market opportunity and brought new challenges to traditional players.
We can see some change that have happened to Toyota and BMW in the China market. It looks like the competition has moved from the tradition fuel vehicle to the new energy vehicles. PSR
Jack Hao is Senior Research Manager – China for Power Systems Research
