Spain's SEAT set to make China comeback by 2021

Spain's largest carmaker SEAT is set to make a comeback in China around 2021, a move that will help its parent company Volkswagen AG secure a larger share in the world's largest new energy vehicle market.

"The Spanish brand aims to enter the Chinese market in the coming two to three years," said Volkswagen in a statement on Tuesday, citing an agreement it signed with SEAT and Chinese carmaker JAC Motors.

SEAT pulled out of China in 2014 after two years of poor sales of its gasoline vehicles.

This time, it will enter the Chinese market through JAC Volkswagen, a 50-50 joint venture established in Hefei, Anhui province, in 2017 to develop, produce and sell pure battery vehicles.

A spokesperson at Volkswagen China said SEAT is scheduled to become a shareholder of the joint venture by the end of 2019, holding at least 1 percent of its equity. According to Chinese norms, it is mandatory for international brands to produce vehicles in China bearing its names.

Luca de Meo, CEO of SEAT, said: "China is the benchmark country for electric vehicles. We aim to be a part of this ecosystem in order to exchange knowledge and make progress in achieving global mobility that is more sustainable."

Currently, JAC, Volkswagen and SEAT are building a 4 billion yuan ($579 million) research and development center in Hefei, which is expected to open in 2021.

JAC and SEAT also plan to develop their own platform for smaller electric cars, a segment that is growing faster than the large-sized ones in China.

"The close cooperation between SEAT and JAC will allow us to create synergies, which will significantly increase our market coverage," said Volkswagen CEO Herbert Diess, who is also chairman of SEAT.

Yale Zhang, managing director of Shanghai-based consultancy Automotive Foresight, said SEAT's smaller cars will help its parent company to reach customers in China's smaller cities, where electric cars built on Volkswagen's own platforms would be less affordable.

Volkswagen, as well as its subsidiaries from Audi to Porsche, plan to deliver around 1.5 million electrified vehicles, most of them pure electric cars, in China by 2025.

It also expects global sales of electrified vehicles will total 22 million by 2028, and half of them will be produced in China.

China overtook the United States as the largest producer and market of new energy vehicles in 2015.

The China Association of Automobile Manufacturers expected sales of such vehicles to reach at least 1.6 million this year, up from 1.2 million in 2018.

Besides electrified vehicles, Volkswagen and JAC have also partnered with local authorities in Hefei to test autonomous driving technologies, including robotaxis and autonomous fleet management, and on-demand mobility services, like ride hailing and car sharing, but none of the parties revealed the details.