German automaker Volkswagen AG (VW) yesterday said that it has agreed to invest 2.1 billion euros (US$2.59 billion) in two separate Chinese electric-vehicle (EV) players, upping its bet on the world’s biggest auto market as international rivals seek to muscle in.
VW said that it would invest 1 billion euros to take a 50 percent stake in the state-owned parent of Anhui Jianghuai Automobile Group (JAC Motors, 安徽江淮汽車集團), also raising its stake in an existing EV joint venture with JAC Motors to 75 percent from 50 percent.
The joint venture would launch five more electric models by 2025 and establish a vehicle manufacturing base, VW said.
The German giant aims to sell 1.5 million new energy vehicles (NEV) — including battery EVs, as well as plug-in hybrid and hydrogen fuel-cell vehicles — a year in China by 2025.
In a separate transaction, VW said that it would pay 1.1 billion euros to acquire 26.5 percent of Guoxuan High-tech Co Ltd (固特高科技有限公司), a maker of EV batteries, becoming its biggest shareholder.
Guoxuan — based in Hefei, China, like JAC Motors — would supply batteries to its EV models in China, VW said.
The deals come as global rivals such as US EV maker Tesla Inc seek to make inroads in the Chinese vehicle market. Tesla last year became the first foreign automaker to wholly own a vehicle plant in China.
China has set a target of 25 percent of 2025 annual vehicle sales to be made up of NEVs. More than 25 million vehicles were sold in China last year.
Yesterday’s moves also make VW the latest foreign automaker to increase ownership of operations in China since the government started to relax rules in 2018, with German peer BMW AG quick to take control of its main local venture.
VW also has ventures with state-owned China FAW Group Co Ltd (一汽富維) and SAIC Motor Corp Ltd (上海汽車).
Shares in both JAC Motors and Guoxuan yesterday morning climbed their maximum daily limit of 10 percent in Shanghai trading.
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