Volkswagen AG has come to a preliminary deal with Chinese automaker Anhui Jianghuai Automobile (JAC) to make electric and hybrid vehicles in collaboration. The two companies are studying how the plan will work, and then they are hoping to sign a formal agreement in coming five months.
China outmatched US last year to become the largest market for pure electric cars. Sales of electric and hybrid cars have rapidly increased in China. The amount of investment and other key factors have not been finalised yet in the agreement between two firms.
JAC is China's ninth largest auto firm in terms of group sales, and it halted trading all of its shares ahead of the announcement about the collaboration. The current preliminary agreement is not legally binding and the final agreement is subject to approvals and filing procedures.
A Volkswagen spokesperson said the company will release a press release on this matter, although he did not reveal any further information. Global car manufacturers have a limitation to manufacture cars domestically in China in collaboration with local firms. Volkswagen has already collaborated with China's SAIC Motor and FAW Group.