VW in possible electric car tie-up with Chinese firm

FRANKFURT • German car giant Volkswagen and China's Anhui Jianghuai Automobile are in talks to build electric cars together, they said yesterday, the latest possible tie-up in a burgeoning Chinese market for clean-energy vehicles.

Volkswagen (VW) said the two carmakers had signed a memorandum of understanding at its Wolfsburg headquarters to explore the possibility of a joint venture focused on the research and development, manufacturing and sales of "new energy vehicles".

In its own statement, Anhui Jianghuai Automobile (JAC) said it expected to sign an agreement with Volkswagen within five months.

JAC chairman An Jin said the firm was looking forward to "a full- scale cooperation" with Volkswagen "to provide Chinese consumers with highly cost-effective battery electric vehicle products".

There were no other details.

The mooted deal comes as Beijing seeks to develop its nascent but growing electric car industry with incentives and other government support in a bid to boost China's environmental credentials and tackle crippling air pollution.

Some 247,000 "zero emissions cars" were sold in China last year, quadruple the number in 2014, according to the China Association of Automobile Manufacturers.

Under Chinese law, foreign companies must enter into joint ventures with domestic firms to produce vehicles in what is now the world's largest car market.

China's top electric car maker BYD has already teamed up with Germany's Daimler, while French carmaker Peugeot Citroen said earlier this year it would develop electric cars with Chinese partner Dongfeng Motors from 2019.

JAC, a state-owned vehicle maker, aims to bring the production and sales of new energy cars to more than 30 per cent of the total by 2025, according to its website.

Volkswagen is revving up its focus on green energy vehicles with plans to launch more than 30 all- electric models within the next decade. Those efforts have become more urgent in the wake of Volkswagen's "dieselgate" emissions cheating scandal, which has hurt sales and cast a spotlight on the harmful effects of polluting engines.

AGENCE FRANCE-PRESSE

A version of this article appeared in the print edition of The Straits Times on September 08, 2016, with the headline 'VW in possible electric car tie-up with Chinese firm'. Print Edition | Subscribe