The Volkswagen Group is trying to decide where to invest billions in one or more factories to manufacture battery cells and packs, and China appears to be on top of the list.
Automotive News is reporting that a source close to senior management said, “China is likely one of the first, since we think electromobility will catch on there as a trend much sooner given the government’s relentless push.”
Volkswagen has its back against the wall in attempting to move away from the diesel cheating scandal while, at the same time overhauling its long term strategy for the group’s 12 brands.
According to CEO Matthias Mueller, a key part is an “electrification initiative second to none in the industry” including the launch of 30 fully electric models by 2025.
The German automaker is now forecasting sales between two and three million battery electric and plug-in hybrids by that date.
Mueller has stated that just five years later, a third of the group’s entire fleet of new cars will be electrified.
In order to reach that number, the source said, “That is roughly 10 battery plants, each requiring investments of 2.4 billion dollars, so that’s 24 billion in total.”
China’s government is determined to push ahead towards electric vehicles, hoping it can alleviate the smog and pollution in city centers.
In addition to the potential of increasing EV sales, China offers another advantage for VW.
If one or both of the company’s joint ventures in the country built a battery factory, VW would only have to shell out half of the funding with the other half coming from its partners.