Audi AG has entered into a Joint Venture with China’s oldest and State-owned automobile manufacturer, First Automobile Works (FAW)
German luxury automobile manufacturer, Audi AG has entered into a Joint Venture with China’s oldest and State-owned automobile manufacturer, First Automobile Works (FAW) to produce luxury electric vehicles in China.
Audi is one of the world’s best-selling luxury automobile cars globally. FAW is China’s third largest automotive manufacturers, with registered capital of Renminbi (RMB) 35.4 billion yuan and total assets of RMB 457.83 billion yuan. RMB is the official currency of China. Popular Chinese brands like ‘Hongqi’ and ‘Red Flag’ are part of FAW group.
Audi and its owner Volkswagen hold 60% stake in the joint venture and FAW holds 40%. The new joint-venture factory will build fully electric Audi models. The U.S. $ 4.6 billion facility is set to open in the Changchun region of Jilin Province in China by 2024.
Speaking on the occasion, the Chairman of the Board of Management of AUDI AG – Markus Duesmann said, “With the new Audi-FAW company in Changchun, we are further expanding our presence on the Chinese market and actively helping to shape the transformation of the Chinese automotive industry.”
Sharing his thoughts, the President of Audi China – Werner Eichhorn said, “This deepened partnership between Audi and FAW heralds a new era of electrification as the next ‘golden decade’ for Audi on the important Chinese market.”
Taking it to twitter, the official twitter handle of Audi tweeted,
#Audi strengthens #business in #China: The newly founded Audi-FAW cooperation company for electric car production in Changchun is further expanding our presence on the Chinese market. More about our new era of #electrification >> https://t.co/GjmAHK9ont pic.twitter.com/SmAZtgnn3z
— Audi (@AudiOfficial) January 18, 2021
FAW was formed as a part of an industrialisation push by Chinese Communist Party Chairman – Mao Zedong in the 1950s. Its premium Hongqi models were originally created to transport diplomats and Communist Party officials. FAW sold more than 3 million units, including 200,000 of its premium Hongqi branded cars.
Audi wants electric vehicles to make up 1/3rd of its sales in China by 2025. China is the single biggest market for Audi where it sold more than 700,000 vehicles in 2020.
The Audi-FAW collaboration comes at a time when demand for electric vehicles is rising. According to International Energy Agency, there were 7.2 million electric cars on the road globally in 2019. Of this, 47% of them were in China. As per China Association of Automobile Manufacturers (CAAM), the demand for electric vehicles is expected to rise to 1.8 million units in 2021.
Audi-FAW’s biggest competitor in the Chinese market would be Spotlight Automotive, a 50:50 Joint Venture between another German luxury carmaker BMW and China’s largest sport utility vehicle and pick-up truck producer, Great Wall Motors. The U.S. based Tesla has also rolled out its first Chinese-made electric vehicles. A lot of local start-ups, like Nio, Aiways, XPeng, Li Auto and WM Motor are also vying for a slice of the Chinese market.
