JVs among domestic and global automakers to boost manufacturing sector and metal consumption in china

China has identified automobiles as one of the key industries in its efforts to beef up the country's manufacturing and innovation capabilities. Not only the country is encouraging domestic automakers to make world class cars, but also inviting established global car manufacturers to invest in the country to come up with world class electric vehicles. The government is planning to tackle their steel and aluminium overcapacity by quickly developing the automotive sector that are the largest consumer of the metals after the building and construction sector.

The Volkswagen Group started an electric vehicle joint venture with Jianghuai Automobile called JAC Volkswagen Automotive Co. and launched mass production at a plant in the east China city of Hefei last week. JAC VW was a 50-50 partnership venture that started in early 2017 in order to produce EVs with annual production capacity of 100,000 units.

According to VW update, the first product to be rolled out from the factory is the Sol-badged E20X subcompact crossover. It will go on sale in China in the second half of 2018. The EV has the capacity to drive more than 300 kilometers (186 miles) on one change. The car design was “inspired” by the Volkswagen Group’s Seat brand while the technology was developed by JAC.

The car features an AI-driven speech dialogue system and intelligent mobility services for battery charging and parking.

The joint venture is expected to help VW comply with a Californian-style carbon trade program the Chinese government will enact in 2019 in order to push automakers to ramp up EV output as a way of cutting down on petrol and gas fuelled cars.

China is also working on their strategy to encourage state-owned automakers to bring in private car manufacturers as investors as it seeks to create an industrial champion to compete with global peers. This is how carmakers like Toyota and Volkswagen Group are getting into the automotive scenario in collaboration with domestic carmakers. JAC VW was the third joint venture of the global carmaker in China after the partnerships with China FAW Group Corp. and SAIC Motor Corp. Besides central-government owned companies, provincial governments in China control automakers such as SAIC, BAIC and Guangzhou.