Ahead of the Guangzhou auto show, Volkswagen Group has announced it plans to spend 10 billion euros ($11.8 billion) by 2025 to develop and manufacture all-electric and plug-in hybrid vehicles as it seeks to comply with upcoming stringent rules in China.
It's pollution like this that China wants to clear And its electric vehicle production and sales quotas are leading the way. The goals to be met by 2019 have led to a flurry of deals as automakers in China race to ensure they don't fall short. The latest in line - Volkswagen. It's to spend 10 billion euros by 2025 to develop and manufacture all-electric and plug-in hybrid vehicles in the region. (SOUNDBITE) (English) MINT PARTNERS, HEAD OF CAPITAL MARKETS, BILL BLAIN, SAYING: "That's pretty much a textbook business 101 strategy. China has the biggest car market in the world, let's go build them electric cars. I think it's interesting the announcement said what the new plant will - cost 20 billion, and then they will spend 50 billion in buying the electric batteries to actually stick into the cars." The group, which includes Volkswagen and Audi plans to launch 15 NEV models over the next two to three years. And an additional 25 after 2025. Carmakers that fall behind the targets could be penalised and required to buy credits. But some say China's plans might not be as green as they seem. (SOUNDBITE) (English) MINT PARTNERS, HEAD OF CAPITAL MARKETS, BILL BLAIN, SAYING: "Electric cars are a producer of an awful lot of carbon in building them. And once they're built, they require a lot of energy to power them. It's actually pouring the electricity into the battery that is going to be one of the issues. Now that is still unresolved and it's the part of the equation that I think the markets tend to ignore because they think here we are excellent a chance to invest in a company that's going to build batteries, without questioning where are the electric to pull it up comes from." VW says some of its new models will have a 400-600km driving range on a single full charge. That's just shy of electric powehouse Tesla Its model S boasts a range of 490km and as much as 632km depending on battery capacity.