Volkswagen pumps 1B euros into China electric vehicle center

Auto Shanghai, which is underway this week, is a yearly opportunity for carmakers and auto suppliers to flex their muscles and show their commitment to China, the world’s largest auto market.

At this year’s edition, Volkswagen announced that it will invest around one billion euros ($1.1 billion) in a new China center for the development, innovation and procurement of fully connected electric cars. Marcus Hafkemeyer, chief technology officer of Volkswagen Group China, will head the new firm as CEO.

Driven by 2,000 staff, the facility named 100%TechCo plans to merge vehicles and components R&D with procurement. The rationale behind the strategy seems to stem from the German auto giant’s urge to better answer China’s fast-changing consumer needs.

“This will leverage synergies in the development process and integrate state-of-the-art local technologies into product development at an early stage,” the company said in its announcement. That is, local suppliers will get to take part in the initial stages of product development so iterations can happen early on.