Volkswagen is looking to build the electric Golf in China next year, using for the first time locally sourced battery cells from a leading local supplier to meet a controversial quota system for electrified vehicles.
According to current plans, the e-Golf that is currently assembled exclusively at VW's factory in Wolfsburg would be built at a FAW-Volkswagen plant – most likely in Foshan, where the combustion engine version of the Golf is made. This time, instead of procuring batteries from its usual suppliers -- South Korea's LG Chem or Panasonic of Japan -- the cells would be purchased from China's Contemporary Amperex Technology Ltd. (CATL).
A spokesman for the company declined to comment on the e-Golf, but did confirm that local production of electric vehicles was being rolled out using both the MQB architecture that underpins the brand's flagship hatchback as well as the upcoming MEB electric vehicle platform.
"We're just ramping up production of plug-in hybrids, and (Volkswagen's China CEO) Jochem Heizmann has said battery electric vehicles based on the MQB would come to China in a first stage before being followed by MEB-based vehicles in the coming decade," he said.
By localizing production in China all the way down to the high voltage battery pack and cell, VW would qualify for important subsidies, without which the vehicle could likely struggle to compete. Most battery-electric vehicles sold in the market come from Chinese brands, the one area where they have an advantage over their foreign competitors largely because of government regulations that favor a domestic manufacturing footprint.
Volumes of electrified vehicles will play a major role as early as next year, when draft legislation under discussion could take effect. Under the new requirements, credits would be assigned for each plug-in hybrid or battery-electric vehicle sold depending on its zero-emissions range. The cars would be counted toward meeting a moving sales target for what China calls new energy vehicles (NEVs). Those targets are 8 percent for 2018, 10 percent for 2019 and 12 percent for 2020.
Should a manufacturer sell 1 million cars in China, for example, under the credit system it would not have to sell 80,000 NEVs, but rather 16,000 BEVs with a minimum range of 350 kilometers since these count fivefold or 40,000 plug-in hybrids, or a mix somewhere in between. Last year, Volkswagen Group sold almost 4 million vehicles in China.