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China Authorizes USD3.3 Billion EV Joint Venture of Audi and FAW Group

China Authorizes USD3.3 Billion EV Joint Venture of Audi and FAW Group

China: The Chinese government has granted authorization to construct an electric vehicle plant, a joint venture of German automaker Volkswagen and its Chinese state-owned partner, FAW Group, in the provincial capital of Changchun city. The companies have allocated an investment of USD3.29 billion (20.93 billion yuan) for the construction of the plant. The venture plans to produce three electric models in the plant facility, which will have the capacity to manufacture 150,000 cars annually. The plant construction is expected to commence in the second quarter of 2022, and vehicle production will start from December 2024. 

Audi, a subsidiary of Volkswagen, had signed a memorandum of understanding with FAW Group in October 2020. The partnership is aimed towards the future production of PPE-based electric vehicles to usher in a new era of electrification and shape the transformation of the Chinese automotive industry. With overseas collaborations, Audi plans to strengthen its presence in the biggest foreign market and increase the manufacturing of locally produced models in the coming years. In 2020, Audi sold around 727,358 vehicles in China, which is the brand’s best result in over three decades in the Chinese market. The luxury carmaker also aims to account for a third of electrified Chinese automobile sales by 2025, partnering with Shanghai-based automaker SAIC Motor.

Confirming the approval from Chinese authorities for the manufacturing plant, Volkswagen spokesperson said, "The Audi FAW NEV project is an important cornerstone of Audi's electrification strategy in China." He further said, "We are consequently pushing forward the relevant works in this project. The plant's construction is planned to start in the second quarter of 2022."

Commenting on the recent development, TechSci Research Director, Mr. Karan Chechi said, “The lifting of strict ownership rules on joint ventures with foreign auto manufacturers by the Chinese government has led to the entry of sophisticated foreign companies like BMW, Audi, Ford, and others in the Chinese market through joint ventures. This will help the foreign auto manufacturers expand their presence in the fastest growing economy and boost their sales.”

According to TechSci Research report on China Electric Vehicle Market By Vehicle Type (Two-Wheeler, Three-Wheeler, Passenger Car and Commercial Vehicle), By Drivetrain Technology (BEV Vs. PHEV), By Charging Infrastructure, Competition, Forecast & Opportunities, 2016 – 2026”, China electric vehicle market is expected to grow at a formidable rate during the forecast period. The growth can be attributed to the rising concerns about pollution and increasing affordability of electric vehicles.

According to another TechSci Research report on “China Electric Bus Market By Seating Capacity (Up to 30-Seater; 31-40 Seater; & Above 40), By Battery Type (Lead Acid & Lithium Ion), By Application (Intercity; Intracity; & Airport Bus), By Bus Length (6-8m; 9-12m; & Above 12m), Competition, Forecast & Opportunities, 2024, China electric bus market is anticipated to register a double-digit growth during the forecast period. The growth can be attributed to the rising vehicular emissions and increasing initiatives by government for green transportation.