Volkswagen increases position in JAC joint venture, parent company

Volkswagen will increase its stake in the JAC Volkswagen joint venture and acquire 50 percent of the parent company to enhance its electric strategy, the company announced on Friday.

Around 1 billion euros (US$1.1 billion) will be invested. This amount includes the acquisition of 50 percent of JAG, the parent company of the Volkswagen partner JAC, and an increase in the stake in JAC Volkswagen from 50 to 75 percent. By gaining management control, Volkswagen is paving the way for more electric models and infrastructure.

Founded in 2017, the JAC Volkswagen joint venture is an all-electric company which develops, produces and sells new-energy vehicles. A portfolio expansion of up to five additional electric vehicle models by 2025 is planned, as well as building a full-scale e-model factory and finishing a research and development center in Hefei, Anhui Provice.

Volkswagen also announced that it will acquire 26 percent of electric vehicle battery maker Gotion High-Tech for around 1 billion euros, becoming its largest shareholder.

Both deals are planned to be completed by the end of 2020, subject to customary regulatory approvals.

Herbert Diess, chief executive officer of Volkswagen AG, said that “together with strong and reliable partners, Volkswagen is strengthening its electrification strategy in China. The electric cars segment is growing rapidly and offers a great deal of potential for JAC Volkswagen. We are actively driving forward the development of battery cells in China through our strategic investment in Gotion.”

The company also said that this deal is a milestone as Volkswagen takes a strategic role in a state-owned company for the first time, as well as investing directly in a Chinese battery supplier.

The partnership is an opportunity for Volkswagen to achieve deeper know-how in the field of batteries. Gotion maintains various current and future projects over the entire battery value chain from sourcing, development and production to recycling.

Gotion is in the process of becoming a certified Volkswagen Group battery supplier in China, including supplies for local MEB vehicles. MEB is the new modular electric vehicle platform of the Volkswagen Group.

Stephan Wöllenstein, chief executive officer of Volkswagen Group China, said that "these investments shape the character of Volkswagen in China, making it a more localized, more sustainability-focused mobility company. By opening up the market, China is giving Volkswagen new business opportunities."

China is world's biggest market for electric vehicles. Volkswagen Group China has already planned to deliver around 1.5 million new-energy vehicles to customers across the country in 2025.