German automotive manufacturing company Volkswagen AG (VW)'s China joint venture with peer SAIC Motor Corp, SAIC Volkswagen, has started building a 17 billion yuan ($2.5 billion) new energy vehicle (NEV) plant in Shanghai, which will make VW's luxury Audi brand cars, a possible first for the venture.
The new plant is a key step for Audi to diversify production of its cars in the world's largest car market from its long-standing local partner, Chinese peer FAW Group Corp.
SAIC Volkswagen said the new plant would have an annual capacity to make 300,000 cars and begin production from 2020.
The plant will help VW tap China's fast-growing market for NEVs, a category comprising electric battery cars and plug-in electric hybrid vehicles.