Volkswagen will build an R&D, innovation, and procurement center for fully connected electric cars in Hefei, the capital of east China's Anhui Province, according to an investment agreement signed Tuesday in the city.

Volkswagen signed the contract with the Hefei Economic Development Zone, announcing an investment of around 1 billion euros (about 1.07 billion U.S. dollars) to launch the new company in early 2024, which is expected to bring together 2,000 R&D and purchasing specialists.

"Headquartered in Hefei, the company with the project name of 100%TechCo will be the biggest Group facility of its kind anywhere in the world. It will combine vehicles and components R&D teams with purchasing while integrating cutting-edge technologies from local suppliers," said Ralf Brandstaetter, chairman and CEO of Volkswagen Group China, at the signing ceremony.

He said the new center is expected to gradually shorten the development time of new products and technologies by around 30 percent.

"Thanks to the support of the government departments and officials involved, we have been able to reach an agreement in a very short time. This sort of China speed is crucial for pushing forward our 'in China, for China' strategy to address market-defining trends at an early stage and significantly increase the pace of innovation," said Brandstaetter.