The Volkswagen Group is investing roughly €1 billion (~$1.09 billion) to establish a development, innovation, and procurement center for intelligent electric vehicles in Hefei, a city in southern China, as part of its strategy to expand its development capabilities.

The center, named ‘100%TechCo,’ will combine research and development teams for vehicles and components, thereby integrating advanced local technologies into product development at an early stage and leveraging synergies in the development process.

The objective is to bring Volkswagen vehicles more closely in line with Chinese customers’ preferences and reduce the time to market.

The new center is projected to reduce the development times for new products and technologies by approximately 30%.

According to Ralf Brandstätter, a Group Board Member for China, the formation of 100%TechCo is a significant component of the company’s ‘in China, for China’ strategy.

This will also enhance the effectiveness of collaboration with its joint venture partners and lead to greater profitability.

In addition to combining research and development for vehicles and components in China, 100%TechCo will merge procurement into a unified unit for its R&D activities.

Furthermore, the new company intends to more closely integrate the development projects of all the Volkswagen Group’s joint ventures in China.

The newly established unit, 100%TechCo, is expected to become operational at the beginning of 2024, with over 2,000 employees from procurement and R&D.

Marcus Hafkemeyer, who will serve as the CEO of the new company, said the new company represents a new chapter in Volkswagen’s collaboration with its joint venture partners in Changchun, Shanghai, and Hefei, as well as with the group’s brands.

The company is expected to play a significant role in the development of a future Volkswagen brand model scheduled to launch in 2024.

In October 2022, Umicore, a Belgium-based circular materials technology company, and Volkswagen Group’s battery unit PowerCo announced a joint venture with a plan to invest about €3 billion ($3.3 billion) to establish a large-scale supply chain for sustainable batteries.

Earlier in the year, Mahindra & Mahindra and the Volkswagen Group signed a term sheet on supplying modular electric drive matrix (MEB) electric components for Mahindra’s new, purpose-built electric platform INGLO.