China Bets $1.2 Billion on E-Cars in Volkswagen's Germany

(Bloomberg) -- China's Beijing WKW Automotive Parts Co. is betting on the future of electric mobility in Germany with a billion-euro factory nearby plants owned by Volkswagen AG and BMW AG.

Beijing WKW will invest as much as 1.13 billion euros ($1.24 billion) on an electric car factory in the eastern state of Saxony that will create over 1,000 new jobs, according to a statement by the regional government on Thursday. Saxony courted WKW to set up manufacturing in the state to produce “premium” electric cars, according to the statement.

“Saxony is already a car state and we want that to remain so in the future,” regional Economy Minister Martin Dulig said. WKW hopes to benefit from a “Made in Germany” cachet for marketing its cars, Ministry spokesman Marco Henkel said by telephone on Thursday. WKW hasn't requested state aid, he said.

The Chinese company's investment is occurring just as German carmakers gear up to boost production of electric vehicles. Saxony is already home to plants owned by Volkswagen and BMW. WKW will benefit from proximity to about 750 car part suppliers in the region, according to the statement.

Volkswagen has production sites in Zwickau and Chemnitz in the Saxony, while Porsche SE builds it Cayenne, Macan and Panamera models in Leipzig. BMW says it has one of its most modern plants in the same city, where it's built electric cars since 2013.

Saxony Automakers

Beijing WKW, 25 percent owned by Germany's WKW Erbsloh Automotive GmbH, will invest through its subsidiary Delon Automotive GmbH to develop and manufacture the vehicles, according to company filing on Wednesday. Calls to the company's investor relations department are not answered outside of regular office hours.

Wuppertal-based WKW-Erbsloeh Automotive GmbH won't be providing financing for the project in Saxony, company spokeswoman Monika Kocks said by phone on Thursday.

The announcement was met with skepticism by German automotive analyst Ferdinand Dudenhoeffer from the University of Duisburg-Essen's Center for Automotive Research. WKW is a medium-sized parts supplier without the competency to build cars and German wage levels are prohibitive, according to the analyst

“It's very hard to imagine innovative design coming from the plan,” Dudenhoeffer said. “This is a big announcement but will it ever see the light of day? I have my doubts.”

To contact the reporter on this story: Brian Parkin in Berlin at bparkin@bloomberg.net.

To contact the editors responsible for this story: Reed Landberg at landberg@bloomberg.net, Jonathan Tirone, Chad Thomas