VW Pumps Another $2.3B into EV Bet

BEIJING -- Volkswagen Group agreed to invest 2.1 billion euros ($2.33 billion) in two separate Chinese electric vehicle players.

VW said it will invest 1 billion euros to take a 50 percent stake in the state-owned parent of Anhui Jianghuai Automobile Group, also raising its stake in an existing EV joint venture with JAC to 75 percent from 50 percent.

VW will gain full management control of the JV, said Stephan Wollenstein, the company's China CEO.

The joint venture will launch five more electric models by 2025 and establish an EV factory in Hefei, VW said.

The automaker aims to sell 1.5 million new energy vehicles (NEVs) -- including full-electric cars as well as plug-in hybrid and fuel cell vehicles -- a year in China by 2025.

The production of EVs based on the MEB platform will start at the JAC-VW venture in 2023, Wollenstein told a media briefing on Friday.

In a separate transaction, VW said it will pay 1.1 billion euros to acquire 26.5 percent of Guoxuan High-tech, a maker of electric vehicle batteries, becoming its biggest shareholder.

VW said Guoxuan, based in Hefei like JAC, will supply batteries to its EV models in China.

The deals come as global rivals such as EV maker Tesla seek to make inroads in the Chinese car market. Tesla last year became the first foreign automaker to wholly own a car plant in China.

China has set a target of 25 percent of 2025 annual vehicle sales to be made up of NEVs. More than 25 million vehicles were sold in China last year.

Friday's moves also make VW the latest foreign automaker to increase ownership of operations in China since the government started to relax rules in 2018, with BMW quick to take control of its main local venture.

VW also has ventures with state-owned China FAW Group and SAIC Motor.