Chinese makers like BYD want to gain the lead in battery technology and may do so by working with their German counterparts.
China and Germany have signed a new round of 14 trade deals, including one valued at more than $15 billion.
The agreement that has sparked considerable interest is one that calls for closer collaboration between German automakers and their Chinese counterparts on the development of electric vehicles. German and Chinese companies, such as Mercedes-Benz and BYD, are already working jointly on EV projects.
The new contracts include one for an electric car project between German auto giant Volkswagen and its Chinese partner First Auto Works, or FAW, involving a factory in Foshan.
VW also signed a deal with Shanghai Automotive Industry Corporation, its other key Chinese partner, while Daimler and the Beijing Benz Automotive Company inked an agreement on investment in new products, engines and a research and development center within China.
China is already the world’s second-largest industrial economy, having edged out Japan, while Germany is the world’s fourth largest economy. Governments in both countries have made significant commitments to the development of electric vehicles.
The high-level involvement of both governments has already forced diesel-oriented companies such as VW and Daimler AG to devote more resources to EV development over the last 36 months. It also has the potential of leapfrogging the EV development in both Japan and the United States where battery cars face considerable skepticism from consumers.
The 14 agreements were signed after the German and Chinese governments held their first joint cabinet meeting, and included four purely commercial deals, the biggest being an order for 62 A320s from European aircraft manufacturer Airbus.
The Sino-German agreement also included commitments to cut red tape blocking mutual investments, to work together on improving energy efficiency in construction and to deepen cooperation in agriculture and science, a German government statement said.
German Chancellor Angela Merkel has made strengthening trade between German and China a key part of her economic and foreign policy during her second term as Germany political leader. China has reciprocated by making Germany one of its key trading partners.