Volkswagen Group and SAIC Motor have signed an extension of their joint venture agreement until the year 2040.
By extending the agreement, the partners say they are creating ‘early planning security beyond 2030 in a very dynamic development phase of the Chinese automotive market’.
At the same time, Volkswagen and SAIC are also accelerating the transformation of their joint venture company, SAIC VOLKSWAGEN, in the areas of product portfolio, production, and decarbonisation, they say. The shared goal of the partners is to achieve a leading market position for SAIC VOLKSWAGEN with the Volkswagen Passenger Cars and Audi brands in the era of ‘intelligent, fully connected electric vehicles’.
Ralf Brandstätter, Member of the Board of Management of Volkswagen AG for China said: “Volkswagen and SAIC are pioneers of individual mobility in China. Together, we established one of the first international joint ventures in the region 40 years ago. With this long-term contract extension, we underline the importance of this collaboration and the significance of the Chinese market for the Volkswagen Group. We are accelerating the transformation of SAIC VOLKSWAGEN in line with our 'In China, for China' strategy on all levels, bringing a new generation of electrified vehicles onto the road by 2026, and thus making our partnership economically and technologically future proof.”
“China is a driver of innovation for autonomous driving and electric mobility. With the new agreement, we are intensifying our integration into the Chinese ecosystem and consistently leveraging local innovation strength. This also creates a strategic competitive advantage for the Volkswagen Group worldwide.”
Wang Xiaoqiu, Chairman of SAIC Motor, said: “Electrification and the transformation of the car into an intelligent vehicle are the defining trends in the automotive industry. In view of the highly dynamic market, SAIC Motors, the first Chinese carmaker to sell more than one million vehicles in the electric segment and in overseas markets, is deepening and expanding its cooperation with Volkswagen. The focus for SAIC VOLKSWAGEN is on the development of new, intelligent electric vehicles in order to maintain an industry-leading position in the field of smart technologies. The decisive factors here are consistent customer orientation, quality management and the use of our own innovative strength. We will break new ground with ‘China Speed’. The aim of the joint venture is to achieve sustainable and steady sales growth and a leading market position. In this way, we are contributing to the further positive development of the Chinese and global automotive industry.”
VW said the original joint venture agreement with SAIC was valid until 2030. However, due to the multi-year planning cycles of new products and the associated investments, fundamental agreements are typically extended several years before their end date.
Volkswagen and SAIC have identified three key areas to accelerate the transformation of the SAIC VOLKSWAGEN joint venture with the Volkswagen Passenger Cars and Audi brands:
- Expansion of Product Offensive with New E-Models, Range-Extender Variants, and Plug-In Hybrids. By 2030, SAIC VOLKSWAGEN will introduce a total of 18 new models to the market. In light of the dynamic market development, the joint venture partners are particularly focusing on an accelerated electrification strategy. This includes eight new electric models. By 2026, two electric vehicles based on the newly locally developed “Compact Main Platform” (CMP) - equipped with a zonal electric architecture used for the first time across the group - will be launched. Additionally, the ‘still highly profitable internal combustion engine offering’ will be transitioned into the electric mobility world by 2026 with three plug-in hybrid models and, for the first time, two range-extender variants. This will rapidly further strengthen the company's position in the fast-growing market for fully electric and partially electrified vehicles. At the same time, the new vehicles will be consistently tailored to customer needs as part of the “In China, for China” strategy. Of the 18 models that SAIC VOLKSWAGEN will introduce to the market by 2030, 15 vehicles are being developed exclusively for the Chinese market.
- Gradual Optimisation of the Production Network with a Focus on Efficiency and Productivity. Given the rapidly growing market demand for electric vehicles and increasing competitive pressure, the joint venture partners will also accelerate the transformation of SVW's production network with a ‘focus on cost-effectiveness and productivity’. In this context, existing production capacity for internal combustion vehicles will be gradually reduced in the coming years. While many SVW sites are being, or have already been, converted to produce electric vehicles based on customer demand, alternative economic solutions will be examined in individual cases, the companies said. This also applies to the joint venture site in Urumqi. Due to economic reasons, the site has now been sold by the joint venture as part of the realignment. The same applies to the test tracks in Turpan and Anting.
- Consistent Decarbonisation Initiatives with Ambitious Goals. As part of the extension of the joint venture agreement, both partners have agreed on ambitious decarbonisation goals for sustainability. SAIC VOLKSWAGEN aims to reduce its CO2 emissions by 25 per cent by 2030 compared to 2018 levels and is actively pushing forward its transformation towards carbon neutrality at the corporate level. Thereby, SAIC VOLKSWAGEN is following the Group’s objective of achieving carbon neutrality by 2050. This positions the company as a pioneer in decarbonisation within the Chinese automotive industry.
“In China, For China” Strategy
As part of its “In China, for China” strategy, the Volkswagen Group says it is determined to drive forward its transformation in China. The VW Group is strengthening its local development skills in e-mobility, digitalisation, and autonomous driving, it says. This involves both enhanced collaboration with its Chinese partners and the consistent expansion of its own additional development capacities. A key role in this context is played by the new development and innovation centre in Hefei, where around 3,000 developers are working on the next generation of fully connected intelligent electric vehicles. This also accelerates the VW Group's decision-making and development processes in the region, contributing to a reduction in the development cycles of new products by 30 per cent, it says.
Over the next three years alone, the VW Group and its brands will bring 40 new models to the Chinese market, half of which will be electrified. By 2030, the VW Group says will offer more than 30 electric models in China.