The new, Changchun-based company is scheduled to be founded in the first quarter of this year, pending stakeholder and Chinese regulatory approval. Production is set to begin before 2025, Audi said late on Monday.

The factory will locally manufacture fully-electric Audi models on the premium electric platform the German car maker has developed with Porsche, also owned by Volkswagen.

“With the new Audi-FAW company in Changchun, we are further expanding our presence on the Chinese market and strengthening our position as a manufacturer of fully electric premium vehicles through local production,” said Markus Duesmann, the chair of the board of management at Audi. 

This is the first time Audi will own the majority interest in a Chinese venture, but it builds upon a longstanding relationship with FAW. 

In October 2020, the two groups signed a memorandum of understanding on joint electric-vehicle production in Changchun, where both Volkswagen and Audi cars have been made by FAW since 1991. Audi and FAW are also already jointly producing two all-electric and hybrid-electric vehicles.

“We are continuing the Audi success story in China and actively helping to shape the transformation of the Chinese automotive industry as it moves toward sustainable mobility,” Duesmann said.

FAW is China’s oldest car maker, and the country’s third-largest. It was founded during Mao Zedong’s industrialization campaign in the 1950s, and still produces limousines for Chinese Communist Party leaders.

China is already Audi’s single-largest market, as well as the world’s largest electric-vehicle market. The China Association of Automobile Manufacturers, or CAAM, estimated in December 2020 that electric-vehicle sales in the world’s most populous country topped 1.3 million units, an 8% increase from 2019.

And CAAM projects that electric-vehicle sales in China will top 1.8 million units in 2021.

Audi isn’t the first German car maker to bet on China’s EV market. Rival BMW BMW, +3.59%, which also makes Mini cars, has a joint venture to produce electric vehicles with Great Wall, the country’s largest SUV and pickup truck producer.