China’s largest vehicle manufacturing group, SAIC Motor Corporation, has agreed to develop several new energy vehicle (NEV) models in collaboration with Volkswagen Group, one of its largest joint venture partners, according to local reports.

The two companies were understood to have signed an agreement last week to co develop three plug in hybrid vehicle (PHEV) and two battery electric vehicle (BEV) models, the first of which was scheduled to be launched in 2026.

The deal would help strengthen Volkswagen’s product range in an increasingly competitive local market.

Ralf Brandstaetter, CEO of Volkswagen Group China, said: “We are strongly pushing ahead with our electrification strategy. In China’s competitive EV market it is importance that we continue to strengthen our strategic partnership with SAIC and drive forward the electrification of the SAIC Volkswagen's portfolio."

In May, SAIC Motor signed an agreement with VW group’s Audi subsidiary to collaborate on the development of an “advanced digitalised platform for Audi brand vehicles”.

SAIC Volkswagen Automotive is one of the most successful foreign automotive joint ventures in China with sales of 1.2m VW and Audi brand vehicles last year.

Volkswagen also has a major joint venture with FAW Group, called FAW Automotive, which delivered 1.9m vehicles last year.