SHANGHAI (Reuters) – Trial production has started at Volkswagen AG’s (VW) (VOWG_p.DE) and SAIC Motor Corp Ltd’s (600104.SS) $2.5 billion electric vehicle (EV) factory in Shanghai, VW’s chief executive said on Friday, the latest development in the race to sell EVs in China.

“The move goes in line with Volkswagen’s (electric) e-mobility initiative,” Herbert Diess told reporters during a tour of the factory.

The announcement comes two weeks after U.S. EV maker Tesla Inc (TSLA.O) also said it had started trial production at its factory in China, where it aims to produce 500,000 cars a year when construction is completed.

Established automakers and startups alike are aggressively targeting China, the world’s largest new energy vehicle (NEV) market, where NEV sales jumped 61.7% to 1.3 million vehicles in 2018.

Volkswagen is trying to leapfrog peers by readying two Chinese EV factories by next year, Reuters reported last month.

Volkswagen’s ID series EVs will be the first to roll off the Shanghai production line, the German automaker said in a statement. The plant will also produce other models such as from VW’s premium Audi AG (NSUG.DE) brand, the joint-venture partners said.

Diess also said Volkswagen plans to make 22 million electric vehicles by 2028, half of them in China. In July, Diess said that by 2035, half of Volkswagen’s annual sales in China will be NEVs.

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