Zhejiang Geely Holding Group, which owns Volvo Cars and England's traditional London taxi maker, plans to invest US$5bn in a new manufacturing hub for new-energy vehicles (NEVs) in China's eastern province of Zhejiang.
The automaker signed an agreement this week with the Changxing county local government to build a new assembly plant and an adjacent industrial park for the production of key components such as gearboxes and other driveline components.
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The first stage of construction is scheduled to begin in October of this year.
NEVs comprise mainly electric and hybrid powered vehicles, sales of which increased by 54% to 777,000 units last year. This included 468,000 all electric passenger vehicles and a further 198,000 all electric commercial vehicles. Plug-in hybrid passenger vehicles accounted for a further 111,000 units
The Chinese central government has set ambitious targets for NEV sales with traditional internal combustion engine passenger vehicles expected eventually to be phased out altogether.
The China Association of Automobile Manufacturers expects sales of NEVs to increase to around 1m units this year, rising to 2m by 2020.
By 2025 it expects NEVs to account for 20% of total vehicle sales in the country.
