No 1, VW, SAIC, FAW to make largest-ever investment in China's auto industry

People walk past a row of Volkswagen e-Golf cars during the company's annual news conference in Berlin March 13, 2014. [Photo / Agencies]

German automaker Volkswagen AG signed joint declarations with its Chinese partners on Friday.

Volkswagen will partner SAIC Motor Corp and First Automotive Works (FAW) Group to develop and begin production of new-energy vehicles in its largest market from 2016. Chinese President Xi Jinping and German Chancellor Angela Merkel were at the signing ceremony.

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Further development of eco-friendly models and a joint research project were agreed for Shanghai Volkswagen while development and manufacturing of a new, very eco-friendly vehicle in China was agreed with FAW.

The projects are part of 18.2 billion euros ($25.1 billion) in investment for new plants and products that Volkswagen and its partners are making between 2014 and 2018. It will be the largest-ever investment in China's automotive industry.

Jochem Heizmann, Volkswagen board member and CEO Volkswagen Group China said Volkswagen's current focus is the plug-in hybrid due to its feasability and cost.

Agreement was also reached on expanding production capacity at the FAW-Volkswagen joint venture. A location has not been selected. Volkswagen wants to produce more than 4 million vehicles annually in China by 2018.

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