Volkswagen has announced that it plans to invest 2.1 billion euros in two different Chinese electric car manufacturers as it bets on the world’s largest car market. The German company will invest 1 billion euros to buy a 50% stake in the state-owned parent of Anhui Jianghuai Automobile Group (JAC Motors), while also upping its state in an existing electric vehicle (EV) join venture with JAC to 75%.
This venture will see the launch of five additional EVs by 2025 and establish a car manufacturing base. VW also plans to sell 1.5 million new energy vehicles or NEVs (both hybrids and EVs as well as hydrogen fuel cells) annually in China by that year.
VW is also paying 1.1 billion euros to buy 26.5% of Guoxuan High-tech Co, a manufacturer of EV batteries. This would make it the company’s largest shareholder. VW says that this company will supply batteries to its electric models in China.
These deals are coming just as international rivals including Tesla look towards the Chinese market. More than 25 million vehicles were sold in China last year. Tesla became the first foreign manufacturer to wholly own a car plant in the country.
China has set a goal of 25% of 2025 vehicle sales to be NEVs. This move would make VW the latest foreign car maker to increase its ownership of Chinese businesses since the government relaxed its rules in 2018. BMW was quick to take advantage of this, setting up its own local venture.
VW also has ventures with both FAW Group and SAIC, two other Chinese car manufacturers.