Volkswagen, the German car company, said Friday it will invest around €2 billion ($2.2 billion) in two Chinese companies in the electric vehicle sector, calling it “the world’s biggest market”.
The German car giant said it will take a 50% stake in JAG — the parent company of state-owned JAC Motors — and increase its holding in the JAC Volkswagen joint venture from 50-75% for around €1 billion.
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% share of Chinese battery supplier Gotion High-Tech for €1.1 billion.
China, which accounts for 40% of Volkswagen’s sales, has become the world’s largest auto market in recent years, with Beijing repeatedly pledging to support the electric vehicle industry.
Volkswagen said it expects to sell around 1.5 million new energy vehicles in the country annually by 2025.
China’s industry ministry said in December the country should seek to ensure one in four of all vehicles sold in 2025 were either hybrids or fully-electric vehicles.
And Beijing decided in late March to extend the tax exemption for the purchase of electric vehicles by two years.
Car sales in China began to slide in 2018 and plunged further when the coronavirus pandemic paralysed the economy, but they have rebounded as the country appears to have brought the virus under control.