Volkswagen AG is shelling out 1 billion euros (roughly $1.11 billion) in a Chinese car company and an additional 1.1 billion in a local battery maker, the company on Friday disclosed, in the latest venture by the car manufacturer on China's electric car market.
The German car giant is ramping up its interest in an established joint partnership with JAC Motors to 75 percent from 50 percent through the ownership of half of the Chinese group's mother company, the state-controlled Anhui Jianghuai Automotive Group. The deal is geared towards electric vehicles.
Such a share will be equivalent to around 3.5 billion yuan, or approximately a staggering $491 million. Add to this their new investments with government-operated China FAW Group and SAIC Motor, the German auto group has already significantly boosted their portfolio -- from petrol to diesel-powered engines -- to green energy electric cars.
The joint agreement will roll out five more electric versions by 2025 and create a competitive car manufacturing facility, Volkswagen disclosed. The German car firm targets to sell around 1.5 million new energy vehicles - including battery-powered electric cars, including as plug-in model and hydrogen fuel-cell units - a year in China around the specified period.
In a separate agreement, Volkswagen announced it will pay around 1 billion euros to purchase over a quarter in stakes in Guoxuan High-tech Co Ltd, a manufacturer of electric vehicle batteries, and become its majority stakeholder.
China, which accounts for around 40 percent of the German auto firm's revenues, has emerged to become the biggest car market in the world in recent years, with Beijing consistently vowing to support the country's electric car industry.
The mainland's industry officials stated in December last year that the nation should work to ensure that one in four of all its cars sold in 2025 should either be hybrid models or fully-electric vehicles.
Beijing decided to extend the tax holiday for the acquisition of electric vehicles by two years, in March last year. Vehicle sales in the country started to slump two years ago and dropped further when the coronavirus outbreak crippled its economy, but sales have bounced back as China has made serious efforts to keep the virus at bay.
The latest investment partnership comes as global competitors such as US electric car giant Tesla seeks to make major headways in the Chinese car landscape. Tesla became the first foreign car maker last year to wholly own a car facility in China.
Meanwhile, China is aiming that 25 percent of its 2025 annual car revenues to be comprise of new energy vehicles. Over 25 million units of NEVs were sold in the country in 2019.