After a series of approval processes, the joint venture new energy vehicle project between Audi and FAW finally landed in Changchun, China's automobile city.
Recently, the project filing information of the Industrial Department of the Jilin Provincial Development and Reform Commission shows that the total investment of the project is 20.93 billion yuan, which is scheduled to start construction in 2022 and be completed by the end of 2024. After the completion of the new project, three pure electric vehicles will be produced, with a total production capacity of 150,000 vehicles per year in the factory, which will be sold by FAW dealers in the future.
Audi FAW and FAW Audi, seemingly a rearrangement of the name order, are a new attempt by Audi to carry out new energy vehicle projects in China.
In particular, the high-end pure electric vehicle platform PPE that will be used in the joint venture project can be regarded as the first new attempt. In the electrification plan of the Volkswagen Group, there are four pure electric vehicle platforms: MLBevo platform, MEB platform, PPE platform and J1 platform. The PPE platform focuses on high-end, high-profit pure electric models, and the pure electric Porsche Macan is the first work under this platform.
Audi FAW will start production of three PPE platform models, including pure electric SUVs and pure electric cars. Officials said that this will bring Chinese consumers a wealth of high-end electric travel options.
With the landing of Audi FAW, Audi has three joint venture companies in China, and among the two companies established in the early stage, although fuel vehicles are still the main products, they also have the production capacity and landing products of new energy vehicles.
So why did Audi set up a new new energy vehicle company in China and bring a high-end pure electric platform that the previous two joint ventures did not have?
The most direct answer to the first question is a change in national policy. The National Development and Reform Commission and the Ministry of Commerce mentioned in the Special Administrative Measures for Foreign Investment Access (Negative List) (2021 Edition) and the Special Administrative Measures for Foreign Investment Access in Pilot Free Trade Zones (Negative List) (2021 Edition) issued last year that from 1 January 2022, in the field of automobile manufacturing, the restriction on foreign ownership in passenger car manufacturing and the restriction that the same foreign investor can establish two or less joint ventures in China to produce similar vehicle products will be abolished.
From the perspective of equity structure, Audi FAW New Energy Automobile Co., Ltd. is held by Audi, China FAW and Volkswagen China, of which Audi holds 55%, China FAW holds 40%, Volkswagen China holds 5%, and Audi occupies a controlling position. Holding means that the new company will have greater autonomy to do business in China, and "one more equity is one more income" will also bring considerable profits to Audi.
In addition to the liberalization of the share ratio restrictions, the increase in the penetration rate of New Energy Vehicles in China is also stimulating Audi to step up the pace of investment in China's new energy vehicle market. At present, the global penetration rate of new energy vehicles is 7%, the penetration rate of mainland china is 12%, and the overall penetration rate of Europe is 13%, although compared with Germany's penetration rate of 22%, the mainland still has room for development in the field of new energy vehicles, but compared with the penetration rate of only 4% and 0.8% in the United States and Japan, Chinese car companies, including joint venture car companies, have more market environment and policy environment advantages.
In the context of the liberalization of the shareholding ratio, in the market where the penetration rate of new energy vehicles is increasing, Audi has established a joint venture in China focusing on new energy, which is naturally beyond reproach. Audi, which has a controlling position in the new company, has brought a higher-end, higher-margin PPE platform to China, and there are many reasons for this.
Putting aside the "share ratio", Audi really needs higher positioning models to open up China's new energy high-end market. In Audi's new energy model structure, the division of labor between low-end models and high-end models has never changed.
At present, Audi's new energy models on sale in China are only based on the MLBev platform to build e-tron, Q4 e-tron and Q5 e-tron under the MEB platform have not been officially delivered, it will take time to open the mid-range market, and a variety of oil-to-electricity products have been launched, which has little effect on the brand image improvement of Audi's pure electric era.
In addition, in the high-end new energy vehicle market, the old rivals Mercedes-Benz and BMW are also actively laying out, BMW iX, Mercedes-Benz EQS are all strong, and the new forces represented by Gaohe have also stepped on the high-end threshold of 800,000 yuan.
Of course, what is more important is that China has a vast new energy vehicle market. Some institutions predict that the sales volume of China's high-end automobile market will exceed 4 million units in 2030. At the same time, the share of new energy vehicles in the high-end market will also increase to 40%. Winning high profits in the high-end market has prompted Audi to speed up the construction of high-end pure electric platform factories in the Chinese market with a good market foundation and policy environment.
In July last year, Audi mentioned in the "2030 electrification" strategy that by 2025, more than 30 electric models will be launched, including 20 new pure electric vehicles and 10 plug-in hybrid vehicles, at which time, about one-third of the models it delivers will be pure electric or hybrid models, and the proportion of new energy vehicle sales will increase from 3.5% in 2020 to about 40%.
However, according to the plan, Audi FAW PPE plant production will take nearly three years, during this time, Audi still needs to rely on the existing MEB platform models, improve market acceptance and resist the impact from Mercedes-Benz, BMW, Tesla, China's independent new power brands. How will Audi, which holds a good hand of cards, face the challenge?