Manufacturing News

VW taps electric Golf to help meet China's EV quota

Volkswagen AG plans to build an electric Golf compact car in China starting next year, using battery cells from a leading Chinese supplier to meet a controversial quota system for EVs.

The e-Golf that is assembled exclusively at VW's factory in Wolfsburg, Germany, would also be built at an FAW-Volkswagen assembly plant -- most likely in Foshan.

But instead of procuring batteries from its usual suppliers -- South Korea's LG Chem or Panasonic of Japan -- Volkswagen will buy the cells from China's Contemporary Amperex Technology.

A VW spokesman declined to comment on procurement plans for the e-Golf. But the spokesman did confirm that Chinese-built EVs would use both the MQB architecture that underpins the brand's flagship Golf hatchback as well as the upcoming MEB electric vehicle platform.

"We're just ramping up production of plug-in hybrids, and (VW China CEO) Jochem Heizmann has said battery electric vehicles based on the MQB would come to China in a first stage before being followed by MEB-based vehicles in the coming decade," he said.

By localizing production in China all the way down to the high-voltage battery, Volkswagen would qualify for important subsidies.

Domestic brands dominate China’s EV market -- the one area where they have an advantage over foreign competitors. Now, foreign automakers will have to compete.

Under new government requirements, credits would be assigned for each plug-in hybrid or EV sold depending on its zero-emissions range.

The vehicles would help automakers meet a moving sales target for what China calls new energy vehicles. Those green vehicle targets are 8 percent of annual sales for 2018, 10 percent for 2019 and 12 percent for 2020.

Initially, it looked as if Germany had reached an agreement with China to delay the targets by a year. But sources say recent comments by German Foreign Minister Sigmar Gabriel caused China to stick with its original plan to put the targets into effect next year.

Global vehicle manufacturers have appealed to the Chinese government to delay and soften proposals for electric and hybrid car quotas, according to a letter first reported by Germany's WirtschaftsWoche.

Production of EVs in China by foreign carmakers has been a slow process, in part because carmakers have been reluctant to share know-how with local partners.

Currently, only the long-wheelbase version of the Audi A6 plug-in hybrid is built in China. It will be joined by a plug-in hybrid version of the VW Phideon PHEV starting later this year. Next year, VW Group also will begin production of an EV with joint venture partner JAC.

Daimler recently confirmed plans to build electrified Mercedes-Benz cars starting in 2020. It currently relies on the low volumes of its local EV brand, Denza, which is a joint venture with China's BYD.

BMW has already localized production of two plug-in hybrids, the X1 crossover and 5 series sedan, and it may build a fully electric version of the X3 in China.

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