Chinese Authorities Approve Construction of Audi-FAW Joint Plant

On Feb. 11, 2022, Chinese authorities approved the construction of an electric vehicle (“EV”) manufacturing plant by Volkswagen Group’s Audi and its China-based partners FAW Group. The construction of the EV plant will cost about $3.3 billion.

China is the largest global market for electric vehicles. The country recorded 160% growth in EV sales last year with a total of 3.3 million units sold. Therefore, this project is vital to Audi’s electrification strategy as it expands its presence within China. According to a spokesperson from Volkswagen Group, the project is set to begin in the second quarter of the year.

The construction of the plant will take place in Changchun city, the provincial capital of the northeastern Jilin province. It will occupy 150 hectares and according to Jürgen Unser, the president of Audi China, the project will innovate the e-mobility landscape in China by setting new standards in sustainability, efficiency and digitalization.

The manufacturing factory will have the capacity to produce about 150,000 cars every year with production set to start at the end of 2024. The plant will have a press shop, a paint shop, an assembly, an in-house battery assembly and a site for body construction. Through Audi’s environmental program, Mission:Zero, the company will ensure that site-based operations are sustainable by maintaining neutral levels of greenhouse gas emissions. The venture project seeks to produce three models including the Audi e-tron SUV and an e-limousine.

In October 2020, Audi signed a memorandum of understanding with FAW Group during the German-Chinese Automobile Conference to collectively produce premium electric cars in China. The company’s aim was to generate one-third of its unit sales in China with electric vehicles. However, the delay in the approval put the joint venture behind schedule. According to a report, the approval license was expected in December after mediation from the German economic ministry.

Volkswagen and Audi own 60% of the joint venture while FAW Group owns the remaining 40% stake. Additionally, Volkswagen Group has partnered with FAW Group to produce combustion engine cars in the northeastern Changchun city and the southern Foshan city.

Audi has also partnered with SAIC Motor, a carmaker based in Shanghai to manufacture electric vehicles. In January of this year, the two companies opened the largest Audi store that covered 25,833 square feet. According to Unser, the goal of the cooperation with SAIC Motor is to create a customer journey that is focused on putting clients at the central focus.

China is turning out to be quite the giant in the EV space as evidenced by the number of blossoming manufacturers such as Kandi Technologies Group Inc. (NASDAQ: KNDI) that could take on the existing market leaders like Tesla in the not-so-distant future.

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