Mubasher: Volkswagen AG on Friday announced it has commenced construction work on a $2.45 billion plant in Shanghai to produce electric cars and battery systems by 2020.

The new plant, owned by the Chinese joint-venture partner SAIC Volkswagen, will be the first to exclusively manufacture cars based on Volkswagen's Modular Electric Drive Kit platform, with an annual capacity of 300,000 vehicles, the company said.

The project will be built with 17 billion yuan ($2.45 billion) in investments, SAIC Volkswagen said.

Volkswagen previously revealed plans to deliver 50 fully electric models by 2025 and to have at least 16 electric vehicle plants in Europe, China, and the US.