Volkswagen AG signed a preliminary deal with China’s Anhui Jianghuai Automobile (JAC Motor) to explore making electric vehicles in a new joint venture, the two automakers said on Wednesday.
The two sides are studying the feasibility of a joint venture and aiming to sign a formal agreement within five months, JAC Motor said in a stock exchange filing. Volkswagen VLKAY 1.63% confirmed the deal in a written statement.
Volkswagen said in its statement that the main goal of the cooperation was developing “zero-emission mobility.” A company spokesman said the partnership will most likely focus on pure battery electric cars rather than hybrids.
The investment size and business model of the possible joint venture have not been finalized yet, JAC said.
The memorandum of understanding is not legally binding and a final agreement will be subject to approvals and filing procedures, it said.
Global auto brands are only allowed to manufacture cars domestically in China through joint ventures with local partners, with automakers typically limited to two JV partners. Volkswagen already has joint ventures with SAIC Motor and China FAW Group. – Fortune