Volkswagen Group China announced Thursday that it started to produce two key components of new energy vehicles (NEV) in its plant in northern China's Tianjin Municipality.

The Volkswagen Automatic Transmission Tianjin Co. Ltd began to produce the two components: APP290 E-drive and DQ400e hybrid transmission.

"The local production of NEV components is a key milestone for the Volkswagen Group's e-mobility strategy," said Stephan Wollenstein, CEO of Volkswagen Group China.

Frank Engel, executive vice president of Volkswagen Group China said that China is the world's largest electric vehicle market and plays an important role in Volkswagen's global electric vehicle strategy.

Engel said Volkswagen plans to deliver 22 million all-electric vehicles globally by 2028, more than half of which will be manufactured by Volkswagen's electric platforms in China.

Volkswagen also plans to deliver 400,000 NEVs in China by 2020 and the figure will increase to 1.5 million by 2025, with the Tianjin plant playing a key role in manufacturing, Engel added.

The Volkswagen Automatic Transmission Tianjin Co., Ltd. was established in July 2012, with an investment of 5 billion yuan (about 727 million U.S. dollars). So far, it has invested nearly 18.7 billion yuan in total.

Statistics showed that from January to May, the production and sales of NEVs in China reached 480,000 and 464,000, respectively, up 46 percent and 41.5 percent year on year, respectively.