Home » Analysts expect Volkswagen’s joint venture with JAC to be its new growth pole in China

Analysts expect Volkswagen’s joint venture with JAC to be its new growth pole in China

by SEP Editor
3 mins read

(Photo Credit: volkswagengroupchina)

According to a report released from CITIC Securities, Volkswagen Anhui, Volkswagen’s joint venture with JAC Motor, will become an important strategic role for the Volkswagen Group in China in 3-5 years and is expected to become its third pole of growth in China.

What is Volkswagen Anhui?

According to Volkswagen Anhui, In December 2020, the joint venture JAC Volkswagen Automotive Co., LTD. was renamed as Volkswagen (Anhui) Automotive Company Limited, after Volkswagen Group increased its stake in the company to 75%. Volkswagen Group takes over management control at Volkswagen Anhui. 

JAC Volkswagen, established by the Volkswagen Group and JAC Automobile Group on December 22, 2017, is the Group’s first dedicated NEV joint venture in China.

What is Volkswagen Anhui currently working on?

The second phase of Volkswagen Anhui’s transformation will start in 2021, with the expansion of infrastructure and equipment for the production lines, including the construction of a battery workshop, as well as a vehicle and component validation workshop. The full-scale factory for pure-electric vehicles, with a maximum production capacity of 350,000 units per annum, is due to be completed by the end of 2022.

Volkswagen Anhui ’s future products will be based on the Group’s Modular Electric Drive Matrix (MEB), with the first vehicle expected to roll off the production line in 2023. 

Volkswagen Anhui is on the right track.

“According to our estimates, Volkswagen Anhui is expected to sell 40,000, 80,000 and 200,000 units from 2023-2025,” CITIC said.

(Photo Credit: volkswagengroupchina)

Partnership with Huawei

In December 2019, JAC signed a cooperation framework agreement and an MDC platform project cooperation agreement with Huawei, the team said, adding that the two companies are already cooperating in areas such as HMS, core sensors for autonomous driving, MDC and intelligent cockpits, which are expected to significantly enhance the intelligence of JAC.

Partnership with NIO

JAC’s world-class joint plant with NIO has the first high-end all-aluminum body production line for a local brand, serving OEM stem for NIO’s ES6, ES8, EC6, ET7 and ET5.

From April 2018 to December 2020, NIO paid JAC a total of RMB1.234 billion, including RMB456 million in compensation for damages and RMB778 million in OEM fees, the team said.

The team noted that in May 2021, NIO, JAC and Jianglai signed a three-year manufacturing contract for JAC to proceed with the production of the ES8, ES6, EC6, ET7 and potentially other NIO models, and to allow the maximum production capacity to grow to 240,000 units.

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