Chinese consumer reaction to electric cars made by Volkswagen AG will determine the fate of the German group's plans to lead the industry in battery-powered vehicles, the group's CEO said on Friday.

VW has set a 2018 goal of being the leading provider of electric vehicles (EVs) in the industry and has forecast 3 percent of its overall sales would stem from cars equipped with this form of propulsion.

China is the most important market worldwide for the Volkswagen group, and the success of e-mobility in China is decisive for the global execution of the e-mobility strategy, Chief Executive Martin Winterkorn said in a statement on Friday.

The VW manager's comments are perhaps the clearest indication to date that China car buyers may determine who will emerge the winner in the race for viable and affordable zero-emissions technology.

Eclipsing the United States as the world's largest car market last year, China was only a decade ago a destination for western manufactures to sell obsolete models.

Now carmakers are rushing to offer Chinese buyers the latest technology it has to offer, such as EVs.

Porsche launched the world premiere of its Panamera grand tourer in Shanghai last year, only the fourth model line in its range.

At the Beijing auto show this week, Volkswagen will unveil an electric version of its Lavida sedan, the group's first ever e-car completely designed and produced in China.

Sales of the Lavida equipped with a conventional engine are expected to amount to more than 200,000 vehicles, according to the German carmaker.

Production at both of its local joint ventures, Shanghai-Volkswagen and FAW-Volkswagen, should begin around 2013 or 2014, it said in a statement.

Audi and Skoda also plan to offer EVs.

(Editing by David Holmes)