Bulletin
Investor Alert

Jan. 20, 2021, 3:12 p.m. EST

Audi is betting on the luxury market in a new electric-vehicle venture with China’s oldest car maker

new
Watchlist Relevance
LEARN MORE

Want to see how this story relates to your watchlist?

Just add items to create a watchlist now:

  • X
    Volkswagen AG (VOW)
  • X
    FAW Jiefang Group Co. Ltd. A (000800)
  • X
    Bayerische Motoren Werke AG (BMW)

or Cancel Already have a watchlist? Log In

By Jack Denton

Audi and FAW, China’s oldest car maker, have started a new company to produce premium, fully-electric vehicles in northeastern China, in a bet on the world’s largest car market.

The joint venture will be 60% controlled by Audi and the Chinese division of its parent group, Volkswagen /zigman2/quotes/206919008/delayed XE:VOW -0.28% , with FAW /zigman2/quotes/200328702/delayed CN:000800 +0.60% controlling 40%.

The new, Changchun-based company is scheduled to be founded in the first quarter of this year, pending stakeholder and Chinese regulatory approval. Production is set to begin before 2025, Audi said late on Monday.

The factory will locally manufacture fully-electric Audi models on the premium electric platform the German car maker has developed with Porsche, also owned by Volkswagen.

“With the new Audi-FAW company in Changchun, we are further expanding our presence on the Chinese market and strengthening our position as a manufacturer of fully electric premium vehicles through local production,” said Markus Duesmann, the chair of the board of management at Audi. 

This is the first time Audi will own the majority interest in a Chinese venture, but it builds upon a longstanding relationship with FAW. 

In October 2020, the two groups signed a memorandum of understanding on joint electric-vehicle production in Changchun, where both Volkswagen and Audi cars have been made by FAW since 1991. Audi and FAW are also already jointly producing two all-electric and hybrid-electric vehicles.

“We are continuing the Audi success story in China and actively helping to shape the transformation of the Chinese automotive industry as it moves toward sustainable mobility,” Duesmann said.

FAW is China’s oldest car maker, and the country’s third-largest. It was founded during Mao Zedong’s industrialization campaign in the 1950s, and still produces limousines for Chinese Communist Party leaders.

China is already Audi’s single-largest market, as well as the world’s largest electric-vehicle market. The China Association of Automobile Manufacturers, or CAAM, estimated in December 2020 that electric-vehicle sales in the world’s most populous country topped 1.3 million units, an 8% increase from 2019.

And CAAM projects that electric-vehicle sales in China will top 1.8 million units in 2021.

Audi isn’t the first German car maker to bet on China’s EV market. Rival BMW /zigman2/quotes/202432319/delayed XE:BMW -0.81% , which also makes Mini cars, has a joint venture to produce electric vehicles with Great Wall, the country’s largest SUV and pickup truck producer.

/zigman2/quotes/206919008/delayed
XE : Germany: Xetra
214.20
-0.60 -0.28%
Volume: 174,689
March 5, 2021 6:30p
P/E Ratio
26.43
Dividend Yield
2.24%
Market Cap
€103.10 billion
Rev. per Employee
N/A
loading...
/zigman2/quotes/200328702/delayed
CN : China: Shenzhen
¥ 11.75
+0.07 +0.60%
Volume: 17.20M
March 8, 2021 11:29a
P/E Ratio
13.93
Dividend Yield
0.00%
Market Cap
¥54.32 billion
Rev. per Employee
¥3.59M
loading...
/zigman2/quotes/202432319/delayed
XE : Germany: Xetra
75.67
-0.62 -0.81%
Volume: 1.14M
March 5, 2021 6:30p
P/E Ratio
14.29
Dividend Yield
3.30%
Market Cap
€48.89 billion
Rev. per Employee
€778,977
loading...

This Story has 0 Comments
Be the first to comment
More News In
Economy & Politics

Story Conversation

Commenting FAQs »

Partner Center

Link to MarketWatch's Slice.