Published on November 25th, 2017 | by Tim Dixon0
Volkswagen & JAC Put $12 Billion Into Chinese EV Boom
November 25th, 2017 by Tim Dixon
Originally published on EV Obsession.
Bloomberg recently reported that Volkswagen has outlined its electric vehicle investments in China with an announcement of investment of $12 billion over the next 7 years with its Chinese joint venture partner JAC (Anhui Jianghuai Automobile).
JAC, a relatively unknown company in the west, has had a range of electric cars under the iEV name and has an established production base in China. Volkswagen’s investment timeline for 2025 will see the investment of $12 billion and will help the introduction of 40 locally produced vehicles.
Volkswagen China head Jochem Heizmann informed reporters in Guangzhou on the 9th November 2017 that with their partner they will develop and produce the 40 models for the Chinese market. The joint venture will start production of electric vehicles in the first half of 2018 with the sales starting in the second half of 2018.
This investment into China is part of a wider investment into electrification of Volkswagen AG holdings, which in September announced a €20 billion plan to electrify all of its 300 models in the 12 brands under its umbrella.
Volkswagen will be basing 15 of the models on the MQB platform, which is creating PHEV and EV options based on existing car models. The other 25 will be built on new platforms.
The volume-projected timeline for the sales of electric vehicles in this joint venture is 400,000 units by 2020 and 1.5 million units by 2025.
The policy background
The rationale behind these investments and the announcement in May to form a joint venture with the state-owned JAC is that China has unveiled a comprehensive set of emission rules and a credit-score program tied to the production of electric cars, putting pressure on manufacturers to produce mass-market electric vehicles.
In September, China announced the emission rules and detailed it is delaying the credit score program. The credit score program is a form of cap and trade policy in which manufacturers must obtain a certain new-energy vehicle score, which is linked to the manufacturer’s production of new energy vehicles. The requirement is at least 10% of production in 2019 and moves to 12% by 2020.
The wider picture
VW is not the only company investing in China’s electric car future. The $15 billion Shangri La plan by the Chinese company Changan is another, and there are many other domestic and foreign joint venture investments pouring into the sector. Daimler, Toyota, Ford, the Renault-Nissan Alliance, GM, and BMW have all announced joint ventures in China to produce electric vehicles.
These investments into electric vehicles and the policy support are going to create an interesting and competitive market to watch.