On May 29, the Volkswagen Group officially announced two major deals in China for a total of 2.1 billion euros. The company has agreed to acquire a 50% stake in the local automaker JAG, which manufactures cars under the JAC brand (they are also known in Russia). At the same time, the concern will increase its stake in the JAC-Volkswagen joint venture from the current 50% to 75%. Operations with JAC will cost 1 billion euros. Another 1.1 billion euros will be used to buy a 26% stake in electric vehicle battery maker Gotion High-Tech, enough to make VW the firm's largest shareholder.
The deals are aimed at strategically strengthening Volkswagen in the Chinese market. By 2025, the concern plans to produce 1.5 million electric vehicles per year in China (China is the largest market for battery cars in the world). In addition to JAC, VW has two other major manufacturing partners in China - SAIC and FAW.
The joint venture with JAC will produce five new electric vehicle models by 2025 and build a new factory and research and development center in Hefei. So far, the joint venture produces only one product - the SOL E20X electric crossover.
The purchase of shares in Gotion High-Tech will allow the concern to meet its growing battery needs. Gotion High-Tech has a full business cycle - from development and production to recycling of used batteries. The company is currently undergoing certification as a supplier of VW, it will make batteries, including for cars on the new MEB modular platform.
Volkswagen bought shares of two Chinese companies
