JV's new facility in Shanghai to leverage plant automation trend

SAIC Volkswagen laid the groundwork for its electric vehicle plant in northwestern Shanghai on Friday, which will be Volkswagen AG's first facility of its kind globally.

Covering over 405,600 square meters, the new plant will have a total investment of 17 billion yuan ($2.45 billion). The factory is scheduled to start operation in October 2020, with an annual production capacity of 300,000 vehicles, according to VW.

Battery electric vehicles under the brands of Audi, VW and Skoda will be produced in the new factory, said Chen Hong, chairman of SAIC Volkswagen, said at the groundbreaking ceremony.

According to the JV, automation will be key at the new plant, as it will use more than 1,400 industrial robots. Among those, over 1,000 will be used in the bodywork assembly line.

SAIC Volkswagen is the joint venture set up between SAIC Motor Corp Ltd and VW in 1984. By July last year, the company had produced over 19 million cars.

Herbert Diess, CEO of VG, said at the ceremony that the group has high hopes for the Chinese market and will bring the most advanced technologies to the Shanghai facility.

It will also strengthen cooperation with SAIC in terms of electrification, smart connectivity and high-end brands, Diess added.

The move is a response to VW's Roadmap E strategy, which it announced in September last year. The automotive giant plans to provide around 3 million electric vehicles to global consumers every year by 2025.

By that time, VW will have rolled out more than 80 electric models, among which 50 will be battery powered and the rest plug-in. At least one-fourth of the company's annual output will be electrified, Diess said.

Jochem Heizmann, president of Volkswagen China, said at a news conference late last year that the company will introduce 40 electric models into the Chinese market within the next seven or eight years. A total of 1 million electric vehicles will be delivered to the market by 2020, he said.

SAIC sold more than 90,000 electric vehicles during the first nine months of the year. It introduced the Marvel X under the Roewe brand in August, which is priced at around 270,000 yuan.

In a report released by global market consultancy Roland Berger and German automotive research institute FKA in late August, China remains the global leader in the electric vehicle industry in terms of growth rate in the production and sales of vehicles and batteries.

The report estimated the number of newly registered electric cars is set to top over 20 million worldwide by 2030. The global market volume for battery cells will reach around $19 billion by 2021, with China accounting for 29 percent, followed by South Korea and Japan.