German automotive giant Volkswagen plans to invest around €2.1 billion ($A3.5 billion) into its Chinese electric vehicle operations in a move the company describes as “the next chapter for its business in China.”
The investment includes around €1 billion ($A1.65 billion) to increase its share in JAC Volkswagen – the company’s Chinese joint venture for e-mobility – as well as a further €1.1 billion ($A1.8 billion) in US-based battery developer Gotion, which boasts R&D centres in Ohio, China, Japan, and Europe and will supply batteries for the China EV market.
The €1 billion injection of funds into its Chinese joint venture JAC Volkswagen – which was formed in 2017 as an all-electric company designed to develop, produce, and sell what the Chinese call NEVs (new energy vehicles) – includes buying 50% of JAG – the parent company of JAC Automobile Group, its partner in the JV. As a result, Volkswagen will increase its stake in JAC Volkswagen from 50% to 75%.
“By gaining management control, Volkswagen is paving the way for more electric models and infrastructure,” the company says. It will also facilitate Volkswagen China’s net-zero plans, which will see the company deliver approximately 1.5 million NEVs in 2025.
“Together with strong and reliable partners, Volkswagen is strengthening its electrification strategy in China,” said Dr. Herbert Diess, CEO of Volkswagen AG. “The electric cars segment is growing rapidly and offers a great deal of potential for JAC Volkswagen.
Volkswagen and its Chinese partners are hoping to close the €1 billion deal by the end of the year, but all decisions remain subject to customary regulatory approval.
Volkswagen will also become the largest shareholder in Gotion, an American-based subsidiary of China’s GuoXuan High-Tech, acquiring 26% of the company’s shares through a buy-in of around €1.1 billion ($A1.82 billion), a move it says will ensure a battery supply for its China EVs.
“We are actively driving forward the development of battery cells in China through our strategic investment in Gotion,” said Diess.
“I am delighted with this strategic milestone in our mutual and trusted relations as Volkswagen takes a strategic role in a state-owned company for the first time, as well as investing direct in a Chinese battery supplier,” added Dr. Stephan Wöllenstein, CEO of Volkswagen Group China.
“These investments shape the character of Volkswagen in China, making it a more localized, more sustainability-focused mobility company. By opening up the market, China is giving Volkswagen new business opportunities.”
Volkswagen’s investment in Gotion makes it the first global automaker to invest directly in a Chinese battery supplier, and plans to complete the deal by the end of 2020, subject again to customary regulatory approvals.
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