VW Hikes Stakes in Chinese EV Ventures
Volkswagen is spending $2.3 billion to boost its equity in Chinese makers of electric vehicles and the batteries that power them.
The moves underscore VW’s intent to be a global leader in electrified vehicles.
VW says it will spend $1.1 billion to raise its stake in JAC Volkswagen—the Germany carmaker’s EV-making venture with Hefei-based Jianghuai Automobile Co.—to 75% from the current 50%.
Media reports about the deal began to surface a year ago. That’s when China loosened a government policy that capped foreign investments in carmaking at 50%.
The stake will give VW management control over the JAC partnership. The venture was created in 2017 to develop, produce and market hybrids and all-electric vehicles in China. VW says the partnership will add five battery-electric EV models by 2025, erect a factory dedicated to EV production and complete an R&D center in Hefei.
To facilitate the deal, VW ‘s investment will include acquiring 50% ownership of JAC’s parent, Anhui Jianghuai Automobile Group (JAG), which is owned by the province of Anhui. VW says both investments should be finalized this year.
Historic Battery Deal
Separately, VW is spending $1.2 billion to acquire a 26% stake in Gotion High-Tech, a Chinese batterymaker headquartered in Fremont, Calif.
The deal, also expected to be finalized by the end of 2020, will make VW the largest shareholder in Gotion. The agreement also marks the first direct investment in a Chinese battery supplier by a global car company.
VW says the Gotion is being certified to supply batteries for the carmaker, including future EVs made in China that ride on the carmaker’s electric-specific MEB platform. VW adds that the Gotion investment does not affect current battery contracts with other suppliers.
Why It Matters
VW has been in full electrification mode in Europe since its scandal over rigging diesel engines to evade emission tests. It also has continually expanded goals. The company now expects to launch 75 all-electric vehicles within 10 years, hiking EV output by its namesake brand to 1.5 million units by 2023.
Today’s deals show that VW is making the same long-term commitments in China. When it comes to EVs, this company means business.
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