SAIC VW Begins Work on a $2.5 billion China Factory to Build Audi Vehicles
BEIJING — Volkswagen AG's China joint venture with SAIC Motor Corp has started construction on a $2.5 billion new energy vehicle (NEV) plant in Shanghai, which will make VW's luxury Audi brand cars, a possible first for the venture, Reuters reported.
The new plant is a key step for Audi to diversify production of its cars in the world's largest car market from its long-standing local partner, China FAW Group Corp Ltd. This shift has been delayed amid resistance from local dealers.
SAIC Volkswagen, formerly known as Shanghai Volkswagen Automotive Co., Ltd., said the new plant would have an annual capacity to make 300,000 cars and begin production from 2020. The new plant will be the first to build cars exclusively based on Volkswagen's Modular Electric Drive Kit (MEB) platform.
China is an important market for Audi. The luxury arm of VW sold 481,387 vehicles in China from January to September this year.
Audi unveiled the plan to bolster ties with SAIC in late 2016. In June, the Germany luxury carmaker bought a 1 percent stake in the SAIC Volkswagen venture, paving the way for the joint venture to produce and sell Audi cars.
Volkswagen currently gets a larger proportion of the proceeds from the 50/50 joint venture with SAIC than from its 40 percent stake in its joint venture with the China FAW Group, which was established in 1991.
SAIC Volkswagen said in a statement on Friday the plant would cost 17 billion yuan ($2.5 billion) and would make VW and Skoda models as well as luxury Audi models. The new factory will help VW tap China's fast-growing market for NEVs, a category comprising electric battery cars and plug-in electric hybrid vehicles.
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