(REPOST:Autovista Group)

Volkswagen (VW) is to spend around €10 billion by 2025 to develop and manufacture electric vehicles (EVs) and plug-in hybrid cars in China, as it looks to comply with strict new quota laws.

The vehicle manufacturer will launch 15 of its ‘New Energy Vehicles’ (NEVs) over the next two to three years, with an additional 25 coming after 2025, the company’s China boss Jochem Heizmann told reporters at the Guangzhou Auto Show. These will be produced with its new joint venture partner, Anhui Jianghuai Automobile Group.

The deal between the two companies will see the development of new NEVs begin early in 2018, with sales starting in the second half of the year. VW currently has 10 NEVs on the market, however these are imported models with limited sales volumes.

Under the new plans in China, known as the cap-and-trade-policy, manufacturers would have been required to obtain a NEV credit score of at least 8% in 2018. This means that of all sales by a manufacturer in the country, 8% of these would need to be electric. However, with a number of car makers still developing their EVs and hybrid line-ups, there was a risk that they would not be ready in time. Therefore, the government has delayed introduction of the quotaand will instead bring in a 9% target in 2019.

This move has seen a flurry of activity in the automotive market, with manufacturers racing to ensure that they are not left behind in the world’s biggest market. Many companies are developing NEVs, especially electric vehicles, whether it was their original plan or not. For those that are unable to meet the target, credits will be required which will incur a financial penalty.

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