VW starts work on China EV plant

The first EV produced at the China plant will be a VW-badged SUV. The automaker has not named the crossover, but it previewed the car with the Crozz concept, shown here in concept form at the 2017 Frankfurt auto show.

Photo credit: Reuters

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Volkswagen Group has begun building a plant at its joint venture with SAIC Motor in Shanghai as part of its plan to produce electric vehicles locally for China.

The factory's first EV will be a Volkswagen-badged SUV, which will arrive in 2020. VW has not named the crossover, but it previewed the car with the Crozz concept unveiled at the 2017 Shanghai auto show.

The 17 billion-yuan ($2.5 billion) factory will also produce other EV vehicles based on VW's MEB platform. The plant, capable of producing 300,000 vehicles annually at full capacity, will also build battery systems for the Volkswagen, Audi and Skoda brands, VW said in a statement.

The new plant will be VW's second production site for EVs derived from the MEB platform.

In June, the German auto giant completed expansion of the plant it runs with China FAW Group in the south China city of Foshan, doubling the factory's annual production capacity to 600,000 vehicles.

The expansion will enable the Foshan plant to start assembling MEB-based EVs and battery systems for the VW and Audi brands in 2020.

VW has built vehicle assembly plants across China with SAIC and FAW. The existing plants can produce 5.15 million vehicles a year at full capacity.

In the first nine months of this year, VW and the two JVs delivered 3.3 million vehicles in China, a 5 percent increase from the same period last year.

Despite the huge production capacity it has constructed, the automaker has yet to start producing EVs under its proprietary brands in China.

The Chinese government plans to implement a carbon credit program, which is essentially a quota system, in 2019 to force automakers to ramp up EV output.

To comply with the regulatory requirement, VW formed an EV partnership with Jianghuai Automobile last year while preparing to introduce MEB-based EVs at its joint ventures with SAIC and FAW.

The new joint venture, JAC VW, has annual capacity of 100,000 vehicles. It launched production in May in the east China city of Hefei.

JAC VW will market EVs under its Sol brand. Its first product, the Sol E20X subcompact crossover, will go on sale in China this year.

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