Volkswagen plans first all-electric car for China next year

The announcement comes on the eve of the Shanghai auto show

Volkswagen, Europe's biggest automaker, plans to launch its first pure-electric car in China next year as Beijing steps up pressure on the industry to promote alternatives to gasoline.

The announcement on Tuesday comes on the eve of the Shanghai auto show, which showcases industry efforts to create electric models with consumer appeal. General Motors Co.'s Buick unit and Ford Motor Co. have also announced new electric vehicles for China this year.

The VW model will be the first in a range of electric vehicles in China, said Jochem Heizmann, head of VW's China unit. It is due to be produced under a new brand name with a local partner, state-owned Jianghuai Automotive Corp.

"This will be a new cooperation on pure battery cars," said Heizmann.

"Our challenging target is to come, already next year in 2018, to the market with the first car."

China has the world's most aggressive electric car goals. Communist leaders are promoting them to clean up smog-choked cities and in hopes of taking the lead in an emerging technology.

Regulators have jolted the industry with a proposal to require electrics to account for at least 8 per cent of each brand's production by next year.

At the auto show, the global industry's biggest marketing event of the year, almost every global and Chinese auto brand is showing at least one electric concept vehicle, if not a market-ready model.

Heizmann said VW, which vies with GM for the title of China's top-selling automaker, expects annual sales of at least 400,000 "new energy vehicles" the government's term for electric or gasoline-electric hybrids by 2020 and 1.5 million by 2025.

The plan to create a new brand for the VW-Jianghuai partnership follows an approach taken by Mercedes-Benz, GM and Nissan Motor Co. Foreign brands are under pressure from Chinese regulators to help local partners create indigenous brands.

Despite government subsidies and other encouragement, electric cars have yet to catch on with China's driving public due to concern about their limited range. Most Chinese automakers sell plug-in battery models but their range is usually no more than 120 to 150 kilometres (75 to 95 miles) too little to attract most buyers.

Sales of electric and gasoline-electric hybrids fell 4.4 per cent from a year earlier to 55,929 vehicles while sales of SUVs rose 21 per cent to 2.4 million.

Heizmann said the industry needs to find a way to create electric models that appeal to consumers. He said VW was trying to do that by developing vehicles for different market segments.