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Agence France-Presse

Volkswagen said on Friday that it will invest around 2 billion euros (US$2.2 billion) in two Chinese companies in the electric vehicle (EV) sector, calling it “the world’s biggest market”.
The German car giant said it will take a 50 per cent stake in Anhui Jianghuai Automobile Group Holdings (JAG) – the parent company of state-owned JAC Motors – and increase its holding in the JAC Volkswagen joint venture from 50 per cent to 75 per cent for around 1 billion euros.
The group said in a statement that “by gaining management control, Volkswagen is paving the way for more electric models and infrastructure”.
It will also buy a 26 per cent share of Chinese battery supplier Gotion High-Tech for 1.1 billion euros.
Costly electric vehicles confront a harsh coronavirus reality
China, which accounts for 40 per cent of Volkswagen’s sales, has become the world’s largest car market in recent years, with Beijing repeatedly pledging to support the EV industry.
China’s Ministry of Industry and Information Technology said in December that the country should seek to ensure one in four of all vehicles sold in 2025 were either hybrids or fully electric vehicles.
In late March, Beijing also decided to extend the tax exemption for the purchase of EVs by two years.
Car sales in China began to slide in 2018 and plunged further when the coronavirus pandemic paralysed the economy, but the sector has rebounded as the country appears to have brought the virus under control.
The JAG investment is the first time the German carmaker will take “a strategic role in a state-owned company”, Volkswagen China chief executive Stephan Woellenstein said in a statement on Friday.
Infographics: Global carmakers and their partners in China
China typically requires foreign carmakers to forge joint ventures with domestic firms when establishing manufacturing plants, which means sharing profits and technology with local partners.
But Beijing announced in 2018 that it would end a previous 50 per cent cap on foreign car firms’ ownership of new energy vehicle joint ventures with local companies, while US electric car manufacturer Tesla opened a wholly-owned Shanghai factory last year.
Volkswagen does not intend to “throw away” its electric car venture with JAC, which launched in 2017, because of the advantage of having a “Chinese partner who understands the country”, Volkswagen’s Woellenstein told reporters in a conference call on Friday.
China vehicle sales reverse 21-month losing streak as infrastructure spending ramps up
The lifting of coronavirus lockdowns in China has given the stuttering car industry a jump-start, with sales rising for the first time in two years, as buyers return with the health crisis easing and restrictions on travel and businesses being lifted.
Sales rose 4.4 per cent year on year in April, according to figures from the China Association of Automobile Manufacturers, driven by strong demand for commercial vehicles, which soared more than 30 per cent.
Woellenstein said May sales in the country could meet last year’s level for the same month, and that the German carmaker is currently “more optimistic” about the Chinese market’s recovery.
China’s shaken millennials look to state incentives to recharge auto industry spending
The global car industry, however, faces an existential crisis from the coronavirus pandemic, which has caused sales to plunge as governments forced citizens to stay at home to slow the spread of the virus.
The Volkswagen announcement came as French carmaker Renault announced 15,000 job losses worldwide, and a day after Japan’s Nissan reported a US$6.2 billion annual net loss.
Nissan, already battling weak demand as well as the fallout from the arrest of former boss Carlos Ghosn, said the global outbreak had hit all aspects of its business. The firm said it will close its Barcelona plant and slash production.



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Volkswagen

Volkswagen expands in China with US$2.2 billion investment in electric vehicle sector

A Volkswagen electric vehicle receives a charge during a workshop ahead of the Auto Guangzhou show in Guangzhou, capital of southern Guangdong province, in November of 2017. Photo: Reuters

Volkswagen unveils its ID concept electric sport utility vehicle during the Auto Shanghai 2019 show in Shanghai in April of last year. Photo: AP

Costly electric vehicles confront a harsh coronavirus reality

Volkswagen’s E-Golf electric car is displayed at the Canadian International Auto Show in Toronto, Ontario, Canada, on February 18. Photo: Reuters

26 May 2020, Saxony, Zwickau: Employees work on a side parts for the new ID.3 at the Volkswagen Sachsen press plant which is currently expanding, as VW intends to produce almost all body parts for its electric cars at the plant itself in the future. Photo: Hendrik Schmidt/dpa-Zentralbild/dpa

26 May 2020, Saxony, Zwickau: Assembly work for a new large press is underway at the expanded press plant of Volkswagen Sachsen, VW intends to produce almost all body parts for its electric cars at the plant itself in the future. Photo: Hendrik Schmidt/dpa-Zentralbild/dpa

(ALTERNATIVE CROP) This photo taken on April 13, 2018 shows then newly appointed CEO of German car maker Volkswagen (VW) Herbert Diess (R) and VW supervisory board chairman Hans Dieter Poetsch giving a press conference at the company's headquarters in Wolfsburg, central Germany. - Volkswagen announced on May 19, 2020 to end one of the most potentially damaging cases in its "Dieselgate" scandal, paying 9 million euros in an out-of-court settlement to prevent its two bosses going to trial over market manipulation charges. The German car giant's chief executive Herbert Diess and supervisory board chief Hans Dieter Poetsch were in September 2019 charged for allegedly failing to inform shareholders in a timely manner about the pollution cheating scandal in 2015. (Photo by Odd ANDERSEN / AFP) / ALTERNATIVE CROP

Volkswagen workers are shown at an assembly line for the company’s ID.3 electric vehicle at the German carmaker’s plant in the town of Zwickau on February 25. The ID.3 is one of 70 new electric models that Volkswagen plans to bring to market in the coming years. Photo: AP

Two Sessions 2020: China’s shaken millennials look to state incentives to recharge auto industry spending

Workers labour at an assembly line for Dongfeng Passenger Vehicle Company in Wuhan, in central China's Hubei Province in March 2020. While many migrant workers across China remain trapped by travel bans due to the coronavirus, some industrial production has returned to action, including in the crucial auto manufacturing industry. Photo: Xinhua

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China Business


The German car giant will take a 50 per cent stake in state-owned Anhui Jianghuai Automobile Group Holdings
It will also buy a 26 per cent share of Chinese battery supplier Gotion High-Tech



The German car giant will take a 50 per cent stake in state-owned Anhui Jianghuai Automobile Group Holdings and buy a 26 per cent share of Chinese battery supplier Gotion High-Tech.


Electric & new energy vehicles

Technology

China economy

Coronavirus pandemic

Volkswagen expands in China with US$2.2 billion investment in electric vehicle sector

The German car giant will take a 50 per cent stake in state-owned Anhui Jianghuai Automobile Group Holdings It will also buy a 26 per cent share of Chinese battery supplier Gotion High-Tech

The German car giant will take a 50 per cent stake in state-owned Anhui Jianghuai Automobile Group Holdings

It will also buy a 26 per cent share of Chinese battery supplier Gotion High-Tech