VW is already China's largest automaker.

Volkswagen Group and China’s Anhui Jianghuai Automobile, commonly known as JAC, now have a memorandum of understanding that could lead to a future joint venture building electric vehicles. The new agreement doesn’t yet guarantee these models coming to market, but it represents a major step towards future cooperation. The final deal could happen in about five months, Automotive News Europe reports.

According to the two automakers, the potential joint venture company would develop, build, and sell future electric vehicles for the Chinese market. “Together, Volkswagen Group and JAC will thoroughly explore all options how to concentrate our resources, including existing and future model platforms, technologies and other expertise, to achieve a competitive product strategy as soon as possible," said Jochem Heizmann, President and CEO of Volkswagen Group China.

JAC operates the Jianghuai and Ankai brands in China, and the company has a volume of 333,639 vehicles and chassis through the first half of the year. The business builds commercial models like trucks and buses but also makes products for consumers. According to Automotive New Europe, JAC is China’s ninth-largest automaker and one of the nation's biggest EV makers.

A finalized deal could help VW Group extend its lead over General Motors as the largest automaker in China. Through July, deliveries totaled 2.148 million vehicles, which was up 8 percent from last year. The market has been so important for the company that it created several exclusive vehicles there, like various long-wheelbase models and the recent Phideon flagship sedan. 

Electric vehicles are also increasingly popular in China because government incentives push consumers towards buying them. The country’s regulations already have brands offering exclusive EV and plug-in hybrid models there like the BMW X1 PHEV and Denza 400 by Daimler and BYD. Bentley is even considering an electric Mulsanne because offering a zero-emissions powertrain might be the only way to sell the luxury sedan in some cities in the future.

Source: Volkswagen Group, Automotive News Europe

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