Czech automobile company Škoda Auto has signed an agreement with Volkswagen and SAIC Motor Co., Ltd. to invest €2 billion ($2.3 billion) over the next five years for the development of Škoda's model range in China.

This investment will also go toward pioneering electric drive concepts, connecting Škoda cars to the Internet and digitizing individual mobility, according to the company. Pending approval by the Chinese authorities, Škoda will also assume an equity position in joint venture SAIC Volkswagen Automotive Company, Ltd.

"Our aim is to double Škoda deliveries in China by 2020. For this, we’re now laying the foundations together with SAIC Volkswagen," said Škoda CEO Bernhard Maier.

The focus of this investment will be on expanding Škoda’s model range and investing in pioneering automotive technologies. Škoda will present their design study for SUV VisionS to the Chinese public at the Beijing Motor Show in April. The brand also plans to bring in a crossover utility vehicle (CUV) for China in response to a significant increase in sales for the Škoda Yeti.

"The investment of around two billion euros is a strong signal for the future research and development of new vehicle concepts and environmentally friendly technologies in China. The agreement between the two partners is an important step towards the future," said Jochem Heizmann, board member of Volkswagen AG and president and CEO of Volkswagen Group China. 

With commercial agencies in the country as early as 1936, Škoda is considered a pioneer of the Chinese automotive market. Škoda began production in China in 2007. To date, the company has sold over 1.7 million vehicles in China. Six Škoda models produced at four SAIC Volkswagen Co., Ltd. plants and available on the Chinese market.