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Volkswagen To Invest 2 Billion Euros In Chinese Electric Vehicle Industry To Increase Presence


05/29/2020


Volkswagen To Invest 2 Billion Euros In Chinese Electric Vehicle Industry To Increase Presence
Germany’s premier and world largest auto maker Volkswagen AG is set to make an investment of 2.1 billion euros in two Chinese electric vehicle players as the company attempt to boost up its presence in the electric car market of China – the largest in the world.
 
This move by Volkswagen also coincides with push by many of its global rivals such as General Motors, Toyota and Tesla Inc to increase their presence and market share in the Chinese electir vehicles market.
 
A per cent stake in the state-owned parent of Anhui Jianghuai Automobile Group (JAC Motors) will be taken up by Volkswagen through an investment of 1 billion euros, the company said. The deal will also include acquiring full management control of the Chinese company’s existing electric vehicle joint venture with JAC as the deal will result in an increase of stake in the joint venture form 50 per cent to 75 per cent. 
 
The joint venture planned to revamp one existing JAC plant and a 2023 launch its first electric model based on its MEB platform, which is a platform that allows for efficient production of various EV models, said Volkswagen's China chief Stephan Woellenstein on Friday.
 
A target of launching of five more electric models by 2025 has also been set by the joint venture and by then Volkswagen aims to sell 1.5 million new energy vehicles (NEV) every year in the Chinese market and which will include selling a range of battery electric cars as well as plug-in hybrid and hydrogen fuel-cell cars.
 
A 26.5 per cent stake of Guoxuan High-tech Co Ltd, a manufacturer of electric vehicle batteries, is also being acquired by Volkswagen in a deal worth 1.1 billion euros in a separate transaction. This deal will make the German auto giant the largest shareholder of the Chinese auto battery making company. Batteries for its Volkswagen’s EV models in China will be supplied by Volkswagen said Guoxuan, which is based in Hefei like JAC.
 
Volkswagen's EV manufacturing hub in China will be the Anhui province, where Hefei is located, Woellenstein said. He said that its EV strategy in China had not been changed by Volkswagen even after the gasoline market tumbled.
 
“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,” he said. .
 
China has set a target of 25 per cent of 2025 annual vehicle sales to be made up of NEVs. More than 25 million vehicles were sold in China last year.
 
The Chinese government had relaxed regulations for foreign ownership in the country’s auto industry and Volkswagen is the latest foreign automaker to increase ownership of operations in the country since then. Earlier, complete control of its main local venture was acquired by German peer BMW AG. The first foreign company to own a wholly owned car plant in China was Tesla last year.
 
(Source:www.channelnewsasia.com)