Volkswagen Anhui started construction on a proving ground on Wednesday in Hefei, capital of East China's Anhui province.
It is expected to be finished in the middle of 2023, said the joint venture in which Volkswagen holds a majority stake.
The proving ground, covering around 200,000 square meters, focuses on performance and functions testing, and hardware and software applications for vehicles in the development stage, said the carmaker.
Key aspects will cover vehicles' noise, vibration harshness testing as well as driving-assist systems, and connectivity.
"The introduction of our R&D proving ground facilitates the fast development of local solutions, bringing us one step closer to delivering our exciting NEV products to China and worldwide customers," said Ludger Luehrmann, Volkswagen Anhui's chief technology officer.
He said the trend of electrification and digitalization urges the company to speed up the development of future mobility, especially in China, a global frontrunner in new energy vehicles' innovation.
Last year, over 3.5 million electric and plug-in vehicles were sold in China, ranking first in the world, according to the China Association of Automobile Manufacturers.
The association expects their figures to reach 5 million this year as demand continues to rise especially in big cities.
Volkswagen Anhui said the proving ground is part of its R&D facility, which units development, quality assurance, vehicle prototype manufacturing and comprehensive testing under one roof.
Local R&D capabilities at Volkswagen Anhui are key to the group's transformation and e-mobility strategy, said the joint venture in a statement.
The R&D Center is currently building up the battery and vehicle component workshops and the pre-series center, with a target of completion by the end of this year. By then the center will have over 700 employees, said the company.