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JAC-Volkswagen JV gets NDRC approval

HEFEI, Anhui – Jianghuai Automobile Co., Ltd. (JAC) said in a statement on May 22 that it has received approval from the National Development and Reform Commission (NDRC) for its battery electric vehicle joint venture with Volkswagen AG.

The go ahead comes about eight months after the two companies signed an MOU on September 6, 2016.

“In order to boost development of the new energy vehicle industry and deepen cooperation of the EV industries between China and Germany, we hereby authorize JAC and Volkswagen (China)’s joint venture project to produce battery electric passenger vehicles,” wrote NDRC in the approval notice sent to JAC.

The JAC-Volkswagen Automobile Co., Ltd. (temporary name) will have an investment of ¥5.061 billion ($733.48 million), annual output capacity of 100,000 units, and will establish an independent brand and trademark, innovate technology cooperation and business model, and expand both the domestic and international markets, according to JAC’s statement.

The total investment includes about ¥2.95 billion in construction investment and ¥2.11 billion in floating capital. Total capital of the company will be about ¥2 billion, or 39.52 percent of the total investment, while JAC and Volkswagen will each invest ¥1 billion in cash. The ¥3.061 billion remaining will be self-funded. The JV will have a contract period of 25 years.

The JV will utilize an existing piece of land inside the Hefei Economic and Technological Development Zone and build a new manufacturing facility including stamping, welding, coating, general assembly, battery pack workshops as well as R&D center and office space.

JAC-Volkswagen becomes the 15th NEV manufacturer to receive NDRC approval for the exclusive production of battery electric vehicles and also becomes Volkswagen’s third JV in China after SAIC-Volkswagen and FAW-Volkswagen, effectively breaking the industry policy that a foreign carmaker can only have two vehicle JVs in China.

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