A battery-making plant in China would be appropriate because the Chinese government has been strident about forcing an increase in green-vehicle production to combat its urban pollution issues. Additionally, should VW build the factory in China, at least half of the venture would be funded by Shanghai Automotive or another China-based entity.
Reports recently surfaced that VW may build its own version of a Gigafactory, the massive battery-making plant Tesla Motors is building in Nevada. Large-scale battery production is key to expanding the production of plug-in vehicles because such economies of scale will reduce the per-unit cost of plug-in vehicle batteries and remove the need to buy such batteries from companies like Panasonic, Samsung, and LG Chem.
Such is effort is especially important for VW, as the automaker looks to distance itself from the diesel-emissions scandal that broke last September. Already, VW this spring reopened its "Transparent Factory" in Dresden, Germany, as an exhibit site for its planned plug-in vehicle fleet and technological improvements.
Today, Volkswagen and the US Environmental Protection Agency (EPA) announced that the company will pay out up to $14.7 billion to buy back diesel-powered vehicles from customers, terminate leases early, invest in zero-emission vehicle technology, and (maybe) fix already-sold diesels. Previous estimates pegged VW's costs from the fallout from the diesel-emissions scandal at about $10 billion.