GUANGZHOU: German automaker Volkswagen has announced plans to invest €10bn ($11.8bn) in the development of locally produced new energy vehicles in China.

Speaking to reporters at the Guangzhou Auto Show on Thursday, Jochem Heizmann, CEO of Volkswagen China, said the investment would run until 2025 with the aim of bringing about 40 new electric models to market.

The company, which includes Audi, already sells around ten new energy vehicle models in China, but all of them are imported and have low sales, Reuters reported.

Heizmann indicated that Volkswagen will work with its local partners to massively increase its electric and hybrid offering, and he outlined his ambition to sell 400,000 new energy vehicles in China by 2020, rising to 1.5m per year by 2025.

“We need high volumes of new energy vehicles … we are working full speed on this,” he said, in reference to strict new rules that the Chinese government has introduced, requiring automakers to meet production quotas for electric vehicles.

The new regulations, which are designed to help deal with urban China’s dreadful air pollution problem, demand electric vehicles to account for up to 8% of vehicle sales and automakers have been scrambling to meet the requirements.

Under the scheme, automakers must also obtain a new-energy vehicle score – which is linked to the production of various types of zero- and low-emission vehicles – of at least 10% starting in 2019, rising to 12% in 2020, Bloomberg reported.

However, Heizmann expressed confidence that the new rules would not present a challenge for Volkswagen because they have been delayed until 2019 and also car companies are now allowed to combine credits in 2019 and 2020.

Sourced from Reuters, Bloomberg; additional content by WARC staff