BEIJING -- Volkswagen Group is building a new electric vehicle battery system factory in China's Hefei city.
VW said it would invest more than 140 million euros ($164 million) in the battery plant by 2025.
The factory's initial capacity will be 150,000 to 180,000 battery systems a year for local EV production.
VW is also building a factory for EVs in Hefei under a majority-owned venture with JAC. It also holds a stake in the EV battery maker Gotion, which is also based in Hefei.
VW rolled out five ID electric models in China this year. It sold around 7,000 such vehicles in the country last month and aims to deliver 80,000 to 100,000 units in total this year.
VW is in talks to tighten its grip on the Hefei venture, Reuters reported last week, sparking tensions with its other Chinese partners who fear they could be sidelined.
VW is currently building three battery manufacturing facilities in Asia, Europe and the U.S. to be able to meet the growing demand for battery systems in the future, the automaker's components chief, Thomas Schmall, said in the statement.
The automaker's lead battery plant in Brunswick, Germany, is ready to produce up to 500,000 battery systems a year, he said.
VW Group China's companents chief, Frank Engel, said that with the new components plant in Hefei, the share of value added by VW components in future electric vehicles built in the city will be about 40 percent.
The new battery plant will be located in the supplier park of Volkswagen Anhui's EV production site.
VW also is setting up battery assembly capacities in Mlada Boleslav in the Czech Republic and in Chattanooga in the U.S.
The plan is to manufacture more than 1 million battery systems per year in a few years, VW said.
Automotive News Europe contributed to this report