Volkswagen is eyeing China as the first location for its battery-manufacturing plant in a bid to capitalize on the booming electric cars market. 

The German automaker recently announced that it would be introducing as many as 30 electric models over the next 10 years and has projected sales of 3 million units a year.

Like Us on Facebook

In order to achieve this cost-effectively, the company says it needs to shift its focus on "e-mobility," which requires VW to manufacture its own electric batteries and China seems to be their destination of choice for such an investment.

"China is likely one of the first, since we think electromobility will catch on there as a trend much sooner given the government's relentless push," a source close to senior management told Bloomberg.

China would be an ideal site for the battery-manufacturing factory given that the Chinese government is vociferously encouraging the use of green vehicles in order to reduce the increasing levels of pollution in the country.

Moreover, Volkswagen would receive 50 percent financial backing from its Chinese partners Shanghai Automotive or FAW should the automobile manufacturer decide to set up the factory in China owing to laws that cap foreign-owned automakers' investment at 50 percent.

There is ongoing speculation that VW is planning to build its very own Gigafactory, a huge lithium-ion battery-making factory Tesla is constructing in Nevada.

Large-scale battery production will not only bring down VW's per-unit cost of plug-in vehicle batteries considerably but also eliminate its dependence on other companies such as Panasonic and Samsung.

Tagsvolkswagen, VW, china, Electric cars, battery manufacturing plant, battery plant