Volkswagen said on Friday it will invest around 2 billion euros (USD2.2 billion) in two Chinese companies in the electric vehicle sector, calling it “the world’s biggest market”.
The German car giant said it will take a 50 percent stake in JAG — the parent company of state-owned JAC Motors — and increase its holding in the JAC Volkswagen joint venture from 50 percent to 75 percent for around 1 billion euros.
It will also buy a 26 percent share of Chinese battery supplier Gotion High-Tech for 1.1 billion euros.
China, which accounts for 40 percent of Volkswagen’s sales, has become the world’s largest auto market in recent years, with Beijing repeatedly pledging to support the electric vehicle industry.
China’s industry ministry said in December the country should seek to ensure one in four of all vehicles sold in 2025 were either hybrids or fully-electric vehicles.
Sales in China began to slide in 2018 and plunged further when the coronavirus pandemic paralysed the economy, but they have rebounded as the country appears to have brought the virus under control and begins to lift restrictions on travel and businesses.
The JAG investment is the first time the German carmaker will take “a strategic role in a state-owned company”, Volkswagen China CEO Stephan Woellenstein said in a statement.