By on February 15, 2022

Audi and FAW Group, the state-owned partner it is effectively required to have in order to preferential treatment from the Communist Party of China, received some good news this week. Government officials have approved the duo for a new, jointly operated production facility in Changchun.

With Volkswagen Group having shifted its focus toward China in recent years, the market has become all-important for the German company. VW is currently the top-selling brand for the entire region, with its Audi subsidiary typically being the highest volume premium automaker from Europe. Building in China is good optics for brands hoping to remain popular there and has the added benefit of placing manufacturing complexes closer to relevant suppliers, especially if you’re swapping to electric vehicles. 

Decades of allowing foreign entities to make use of its cheap labor force and lower regulatory standards have allowed for component consolidation, paving the way for factories responsible for producing more complex items with higher margins. China now exports essential parts for most major automakers and has become the world’s largest battery exporter by far. Considering the number of companies that are keen to rebrand themselves as green, clean, purveyors of all-electric transportation, the timing couldn’t be more perfect.

Though it also has some downsides.

Volkswagen Group’s Chinese production ties have resulted in accusations of the company directly benefiting from slave labor. The worst of this came in 2020 after the company was chastised for having a facility in Xinjiang where the Chinese government has forcibly detained millions of Uyghurs (a primarily Muslim ethnic minority) at reeducation facilities and work camps. With VW’s foundation being steeped in the anti-Semitic policies of the National Socialist German Workers’ Party (NSDAP), one would think the company would be extra careful not to utilize political prisoners as a source of labor. But Volkswagen actually hasn’t suffered all that much from the decision, save for some bad publicity, and has no intention of changing tactics.

“We have made it clear that we must stand by our commitment in China as a whole, and we will also stand by our commitment in Xinjiang as long as we believe that it is economically feasible,” Stephan Wöllenstein, CEO of Volkswagen Group China, was quoted as saying by Der Spiegel in 2021.

According to Reuters, the companies will be investing a total of 20.93 billion yuan ($3.29 billion USD) for the facility. Local planning regulators have approved the groundbreaking for April of 2022 and completion is tentatively scheduled for 2024. Audi said it would ideally like to see production commence before the year was over. But the facility is already behind schedule after alleged bureaucratic hang-ups attributed to regulators.

From Reuters:

The plant will start production in December 2024 and have the capacity to manufacture 150,000 cars a year, according to the regulator. Its statement also showed the approval was given on Feb. 11, and that the venture plans to produce three electric models, including Audi’s e-tron SUV.

“The Audi FAW NEV project is an important cornerstone of Audi’s electrification strategy in China,” a Volkswagen spokesperson said, confirming the approval.

“We are consequently pushing forward the relevant works in this project. The construction of the plant is planned to start in the second quarter of 2022.”

Audi and FAW collaboratively manufacturer combustion vehicles in Changchun already. The duo signed in October of 2020 to jointly produce premium EVs in China, with the new facility representing the fruit of those efforts.

[Image: JL IMAGES/Shutterstock]

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10 Comments on “Audi Approved for $3.3 Billion EV Factory in China...”

  • avatar
    SCE to AUX

    “Local planning regulators have approved the groundbreaking for April of 2022 and completion is tentatively scheduled for 2024. Audi said it would ideally like to see production commence before the year was over. But the facility is already behind schedule after alleged bureaucratic hang-ups attributed to regulators.”

    How can completion be scheduled for 24 months away, but Audi wants to see cars in 10 months? That’s crazy optimistic.

    Model Ys were rolling out of Tesla’s Shanghai plant 11 months after groundbreaking, but that seems like some kind of record. On the other hand, Berlin can’t seem to clear its paperwork.

  • avatar

    Geld über alles.

  • avatar

    The push for EVs is going to hit a road block coming very soon. Lithium is running out and it’s not a matter of mining it it’s just not there. Some estimates say that Lithium supplies will be depleted by 2030.

    Hmm, A couple of weeks ago, I mentioned something to the effect that lithium (like petroleum) is a FINITE resource.

    • 0 avatar

      @dantes_inferno: “Some estimates say that Lithium supplies will be depleted by 2030.”

      Completely untrue. Total BS. For one thing, every study on lithium availability I’ve seen has massive flaws, The biggest flaw is that none of them foresaw the emergence of sodium-ion batteries that use absolutely no lithium. Zero. They aren’t a fancy lab project either with companies like Bluetti and CATL announcing products. The first generation will be used for energy storage applications, but the second generation will find it’s way into EVs and will probably be the dominant battery technology. They’re far cheaper and have a cost projection of eventually reaching the low $30/kWh range. And don’t even think about whining about sodium limits.

      The other factor not considered is the rapidly improving gravimetric density of batteries. Lighter batteries mean lighter vehicles and less battery capacity needed for a given vehicle range. Less battery capacity means less raw material used for batteries.

      Without those considerations, any study would be inaccurate. I have yet to see a study with those factors included. Even if lithium was to disappear, there are alternatives and EVs do not even need lithium batteries with the next-gen technology.

      BTW, a side benefit of sodium-ion is that it doesn’t have the cold weather issues Li.

      Bluetti Na+ 300 and 480:

      • 0 avatar

        @mcs: Keep telling yourself that if it will make you feel better.

        The X-factor to all of this: human nature (greed, narcissism, avarice, etc.)

        Never underestimate the ability of humans to royally screw things up. See the current world events.

        As for me, I will continue to live my life and enjoy the decline.

    • 0 avatar
      SCE to AUX

      Petroleum doesn’t seem to be a finite resource.

  • avatar

    No issue with EVs generally. My concern is that they are essentially coal powered, since that’s primarily how we are still generating electricity. They are also too costly and impractical for the lower demographics. Not many apartments dwellers in da ‘hood, for example, are going to have access to a charger. So they seem to me to be somewhat of an elite virtue signaling thing at this juncture. At a minimum, you would like to see American jobs being generated by this, not further manufacturing in China. I would also like to see more development of electric semis, as low income areas tend to bear the brunt of diesel pollution related to shipping.

    • 0 avatar
      SCE to AUX

      Natural gas: 40%
      Coal: 19%
      Nuclear: 20%
      Renewables: 20%

      • 0 avatar

        That’s in the US of A. Natural gas is more convenient for power station operators, but it’s more expensive than coal.

        That’s not the case with China, assuming all those electric vehicles stay there. China is planning to build 43 new coal fired power plants.

        More likely, VW’s expansion is looking to export many of those Chinese-made Audis throughout Asia, and possibly to the US.

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