China has aggressively promoted plug-in hybrid and battery electric cars, dubbed 'new energy vehicles', to fight urban smog but is gradually phasing out subsidies in favor of hard requirements like quotas.
Under draft rules released in September, automakers must generate or buy credits equivalent to 8 percent of their overall sales by 2018. Those rules come on top of forthcoming emission standards VW described as the world's toughest.
Germany's Volkswagen said it aims to meet upcoming tough quotas in China for selling more green cars on its own and would not resort to purchasing credits from competitors.
VW, the largest foreign automaker in China, plans to sell electric vehicles to ride-hailing partner Didi and to generate credits in a tie-up to produce electric cars with JAC Motors (600418.SS), its China CEO Jochem Heizmann told reporters ahead of the Shanghai motor show.
In comments that shed light on the complex rules, he said that a car could be worth multiple credits, with full-electric vehicles receiving more credits than plug-in hybrids.
Overall sales of a million cars annually, for example, would require 80,000 credits that could be generated by selling 40,000 plug-in hybrids that receive two credits each, or even fewer if they are fully electric, he said.
VW Group sold nearly 4 million cars in China last year but only "several hundred" imported new energy vehicles. It expects sales to improve as locally produced products are introduced and aims to sell 400,000 by 2020 and 1.5 million by 2025 to meet the quotas, Heizmann said.
It plans to meet the 8 percent requirement even if the government responds to lobbying efforts to delay or reduce the quota, Heizmann said.
"We are fully with all forces working to be able to fulfill this quota system already next year."
As part of planned venture with Anhui Jianghuai Automobile (JAC Motors), VW aims to sell "some 100,000" electric vehicles annually under a new brand name, he added.
(Reporting by Jake Spring; Editing by Edwina Gibbs)