Audi Strengthens Its Presence in Chinese EV Market by Forming a JV with FAW

published: 2021-02-03 9:30 | editor: | category: News

Audi has revealed more information about the new JV that it is forming with China FAW Group for manufacturing EVs. The MoU for the JV was signed in October 2020, and the entity will be officially established in the first quarter of this year. Audi now says that it intends to launch a China-made battery-electric model within three years, and it will be based on the latest version of Premium Platform Electric (PPE) — an architecture that it is jointly developing with Porsche. By setting up this JV, Audi has signaled that it will be expanding its production capacity in China so as to compete more effectively against Tesla in this huge regional market.

Audi’s parent company VW has been working in China for several decades. FAW-Volkswagen, a JV that was established in 1991, has been making passenger cars under the VW and Audi brands at its various factories across China. In fact, VW cars are literally seen as “the people’s cars” in the country due to their immense popularity.

Still, the new JV represents the first time that Audi itself is collaborating with FAW. According to Audi, the JV will be setting up a plant in Changchun, which is the capital of Jilin Province and also known as “the Detroit of China” due to its role as the country’s largest vehicle production center. The plant will be responsible for introducing Audi’s battery-electric models to Chinese consumers.

The new JV does not have a name yet, but it is already unique in two respects.

First, the shareholding structure of the new JV shows that Audi’s and FAW’s stakes are 60% and 40% respectively. For the first time, VW through Audi is the majority and controlling shareholder of a JV formed with a Chinese company.

▲ The above image shows the models under the Audi e-tron series. The chassis below represents an unnamed upcoming model based on the PPE platform.

Second, the new JV will not be limited to producing EVs based on Audi’s own platforms. The PPE platform is also adopted by Porsche for large-size models that are not compatible with the MEB platform. Regarding MEB, it is a general platform that has been developed by VW for EVs under all of the sub-brands. In contrast, PPE is an architecture for the upscale segment of the EV market. VW has said that PPE will be one of its most important platforms for expanding the company’s electric fleet over the next decade.

VW’s EV roadmap currently shows that the electric variant of the Porsche Macan will be the first model to adopt PPE. In terms of features and specifications, PPE provides four-wheel drive, air suspension, and torque guidance. It also supports an 800V battery system that can accommodate a high-power (or fast) charger with an output reaching 350kW.

Since Audi states that the new JV will be manufacturing models based on PPE, the new plant in Changchun will probably not be used for assembling the current models under the Audi e-tron series. This also means that Audi will be developing new passenger cars or SUVs in large or medium sizes for the Chinese EV market.

Given that Audi will be selling locally made EVs in China, it will be able to significantly cut prices and thereby gain a competitive edge. More importantly, Audi can leverage its position as one of the top brands in the upscale segment of the Chinese car market. Part of its charm has to do with VW’s relationship with FAW.

VW regards China as one of its main markets and has the longest presence in the country among European carmakers. In the Chinese market, VW continues to cultivate its status as a provider of popular vehicles for the majority of consumers, while Audi retains its status as a provider of high-end cars for transporting government officials. At the same time, FAW will be offering substantial local support. These advantages will make VW rather formidable as it aims to produce and sell more EVs via the new JV. Tesla, which saw its Model 3 beaten by the VW ID.3 in sales in 2020, will now need to be more cautious as it faces this rival again in China.

 (Images courtesy of Audi.)

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