Volkswagen boosts EV push, to invest $2.3b in two Chinese ventures

A Volkswagen logo is pictured at Volkswagen's headquarters in Wolfsburg, Germany, April 22, 2016. REUTERS/Hannibal Hanschke

Volkswagen AG plans to boost its electric push in China, the world’s biggest auto market, by pumping 2.1 billion euros in two Chinese electric vehicle players.

The deals come as global rivals such as General Motors, Toyota and Tesla Inc seek to expand electric sales in the Chinese car market.

Volkswagen said it will invest 1 billion euros to take a 50% stake in the state-owned parent of Anhui Jianghuai Automobile Group (JAC Motors), also taking full management control of the its existing electric vehicle joint venture with JAC by raising its stake to 75% from 50%.

Volkswagen’s China chief Stephan Woellenstein told reporters on Friday the venture planned to revamp one existing JAC plant and launch its first electric model based on its MEB platform, an architecture enabling efficient production of various EV models, in 2023.

The joint venture will launch five more electric models by 2025, when the German giant aims to sell 1.5 million new energy vehicles (NEV) – including battery electric cars as well as plug-in hybrid and hydrogen fuel-cell vehicles – a year in China.

In a separate transaction, Volkswagen will pay 1.1 billion euros to acquire 26.5% of Guoxuan High-tech Co Ltd, a maker of electric vehicle batteries, becoming its biggest shareholder. Volkswagen said Guoxuan, based in Hefei like JAC, will supply batteries to its EV models in China.

Woellenstein said Anhui province, where Hefei is located, will be Volkswagen’s EV manufacturing hub in China. The Wolfsburg-based automaker has not changed its EV strategy in China after the global gasoline market tumbled, he said.

He added China’s overall auto sales in the second half of this year will be level with same period last year. Volkswagen China’s full-year sales will be lower than last year due to the sales loss in the first months.

Reuters exclusively reported on Wednesday that VW was in final talks to invest in the two companies.

China has set a target of 25% of 2025 annual vehicle sales to be made up of NEVs. More than 25 million vehicles were sold in China last year.

Friday’s moves also make Volkswagen 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.

Tesla last year became the first foreign automaker to wholly own a car plant in China.

Volkswagen also has ventures with state-owned China FAW Group Corp Ltd and SAIC Motor Corp Ltd.

Shares in both JAC and Guoxuan climbed their maximum daily limit of 10% on Friday morning. Volkswagen’s shares fell 3%.

Reuters

 

 

 

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.