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Automakers turn to China as it emerges as the largest EV market

Toyota Motor is considering selling locally designed and manufactured all-electric vehicle models in China, according to a report by Reuters. China aims to phase out fossil fuel powered cars in long-term and in the medium term has set up strict quotas for electric and plug-in hybrid cars which will come into effect from 2019. Under the quotas, the government will require 10% of manufacturers’ output and sales to be clean vehicles in 2019, and 12% in 2020. The China Association of Automobile Manufacturers has recently said that  700,000 electric cars will be sold in the China in 2017 only.

These policy changes have made China the hotbed of electric vehicles and number of automakers are strategizing to get their share in this expanding market. Volkswagen has also announced that the company will be investing $12 billion in China for the development of electric vehicles in the country. The company aims to make the investments by 2025 and produce 40 local models.

Toyota’s has got joint ventures with the local manufacturers namely, China FAW Group Corp and Guangzhou Automobile Group. The company plans to use these joint ventures to manufacture and sell EV in the country. The Japanese company will also launch EV models designed in the home country however, it is not clear that these cars will be manufactured in China or not.

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Automakers turn to China as it emerges as the largest EV market

Recently, Tesla entered into an agreement with Shanghai government to open a manufacturing facility in the trade-free zone of the city. The agreement allows Tesla to own an entire factory instead of getting into partnership with any local manufacturer, this will help the automaker to cut down the cost of manufacturing and sell cars at cheaper rates.

German automaker Daimler also entered into an agreement with BAIC Motor to jointly invest five billion RMB for Battery Electric Vehicles (BEVs) and battery localization. Daimler is carrying out with its plans to be ‘electric offensive’ and globally, more than ten new Mercedes-Benz electric passenger cars are scheduled to be launched by 2022. Ten billion euros will be invested in the expansion of the electric fleet over the next years, and the new electric vehicles will be produced within Mercedes-Benz Cars production network, with plants on four continents. Overall, Daimler is investing around one billion euros in the global production of batteries, estimating that by 2025 electric vehicles will account for between 15 and 25 percent of the total unit sales of Mercedes-Benz. In this light, China can be a big market for the company.

General Motors has also announced that the company will start production of a pure-electric model in China within two years. GM, one of the largest automakers in the Chinese market, plans to launch at least 10 “new energy vehicles” by 2020. To support the growth of its NEV line-up, GM has built a battery assembly plant in Shanghai which should be ready to deliver battery packs by next year.

Another automaker Ford has also entered into an agreement with China’s Anhui Zotye Automobile to invest a combined $756 million to set up a 50-50 joint venture in China to build electric passenger vehicles. The new JV is aimed at expanding Ford’s footprint in China and builds upon the company’s ambitious China electrification strategy. Ford announced earlier this year that at least 70 percent of Ford-branded vehicles sold in the country will offer electrified powertrain options by 2025.

The Swedish automaker Volvo and its Chinese parent Zhejiang Geely Holding also have formed a joint venture to support Polestar— Volvo’s electric car brand– and will be investing US$755 million into high-performance electric cars. They will jointly set up a manufacturing facility for Polestar in Sichuan.

 

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