Volkswagen plans to build a fully electric sports utility vehicle (SUV) for China from 2021, taking on the Chinese market leader Tesla's Model X as the German carmaker ramps up production of zero-emissions vehicles.

The planned new SUV is the latest move in Volkswagen's aggressive growth strategy in China, where electric cars are given preferential treatment by authorities.

VW said its ID ROOMZZ, which it presented in Shanghai on Sunday, will have three rows of seats and an operating range of up to 450 kilometers. The concept car is capable of "level 4 autonomous driving", VW said.

VW Chief Executive Herbert Diess said the ID ROOMZ will be the flagship electric car to be launched by Volkswagen in China.

"We plan to produce more than 22 million electric cars in the next 10 years," Diess said, adding that around half of VW's engineers were working on products destined for China.

Diess said the ID ROOMZ would eventually be rolled out to other markets.

To enhance the VW Group's research and development capabilities, Volkswagen and its premium brand Audi will combine their R&D operations in China.

VW brand's head of e-mobility Thomas Ulbrich said the carmaker will start ramping up production of 33 electric cars by mid-2023, using VW Group's modular electric car (MEB) platform to build electric cars for the Skoda, Seat, Audi, and VW brands.

Ulbrich said VW Group is converting 16 factories worldwide to enable mass production of electric vehicles, of which eight plants will be making VW branded cars.