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Business

China's JAC Motors takes on the world with Volkswagen tie-up

Electric cars to drive the automaker's growth plans

JAC Motors wants new-energy vehicles to contribute 30% of the Chinese company's new-car sales in 2020.

BEIJING -- China's state-owned Anhui Jianghuai Automobile, better known as JAC Motors, looks to drive greater growth by graduating from its home market to the world stage with help from electric vehicles and Volkswagen.

Chinese authorities approved plans in May for a joint venture with Volkswagen focusing on new-energy vehicles, paving the way for the pair to create a new global brand, said Wang Dongsheng, JAC deputy party secretary. 

"We will create a new brand that is not JAC or Volkswagen and enter the global market," Wang told The Nikkei.

Though the partners have yet to agree on a brand name, they aim to release a sport utility vehicle initially in China priced under 200,000 yuan ($30,200) in the January-March quarter. The SUV is in the final stages of development at the automakers' joint research center. JAC's factory in the Chinese city of Hefei will handle production until the new company's factory opens.

"Chinese automakers typically cooperate with foreign companies to expand their presence at home, but our partnership is looking at the entire world," he said. "By leveraging VW's clout in the West, we hope to enter the global market with new-energy vehicles as soon as possible," Wang added.

The Chinese automaker also plans to export passenger cars to Europe under its own brand, seeking approval there to begin sales in 2019 at the earliest. JAC already has exported buses to the region.

JAC entered the electric vehicle market in 2010, one of the earlier Chinese automakers to do so, and has developed a reputation in the field. The JAC partnership is Volkswagen's third with a Chinese company, a special case allowed in the country because of the focus on electric vehicles. JAC aims for new-car sales of 1 million units in 2020, with 30% coming from new-energy vehicles, which include electric vehicles and plug-in hybrids.

China requires new-energy vehicles to make up a certain percentage of production and sales for all automakers operating in the country starting in 2019. Those failing to meet the targets will have to buy credits from competitors. JAC plans to make and sell enough of these vehicles to sell credits and improve earnings.

JAC is also pursuing autonomous-driving technology, teaming with Chinese internet search giant Baidu toward a 2019 launch of a "level 3" self-driving car, a vehicle controlled by computer except in emergencies.

JAC is considering collaborating with Volkswagen on SUVs, pickup trucks, commercial vehicles and a variety of other fields, the Chinese automaker said at the end of November. The pair also will shore up operations for multipurpose vehicles along with the high-growth new-energy field.

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