Volkswagen plans investment in Chinese battery manufacturer
26. May 2020The completion of the share purchase would be Volkswagen’s first direct investment in a Chinese manufacturer of vehicle batteries and is in line with the Group’s strategy of selling 1.5 million vehicles with alternative drive systems in China by 2025. VW, the leading foreign car manufacturer in China, plans to acquire the stake via a private share placement on the Shenzhen stock exchange. Based on Guoxuan’s market value of 2.8 billion US dollars, a 20 percent stake is worth approximately 560 million US dollars. The details of the investment have been finalized over the past two weeks and the companies are now awaiting approval from the Chinese regulatory authorities. After a successful share purchase, Volkswagen would be the second largest shareholder after the 25 percent of Zhuhai Guoxuan Trading Ltd, a company owned by the founder Li Zhen.
Guoxuan is one of several medium-sized companies of Chinese battery manufacturers after the market leaders CATL and BYD. It is based in the eastern Chinese city of Hefei, where Volkswagen already produces electric vehicles with its joint venture partner JAC Motor. According to unconfirmed sources, Volkswagen has been looking for a battery manufacturer as a partner for some time to gain more control over its supply chain. Volkswagen’s long-term plan to build around 26 million electric vehicles by 2029 will require more than the current global production of vehicle batteries.
To meet its sales targets for alternative and new drive (NEV) vehicles, consisting of plug-in hybrids and electric vehicles, Volkswagen and its partner SAIC Motor recently built a new 2.5 billion US dollar plant. The new plant will produce 300,000 vehicles a year. Furthermore, the capacity of a production facility in Foshan in south-east China has been expanded, where VW and the FAW Group manufacture electric vehicles. In addition to its stake in Guoxan, Volkswagen has appointed CATL as a strategically important supplier, and Volkswagen Supervisory Board member Stefan Sommer told Reuters last July that his company would also set up its own factories for the production of batteries in China if necessary. Does your company want to export its products to China? Then in many cases they will need certification in accordance with the CCC (China Compulsory Certificate) guidelines. We would be pleased to advise you and carry out the CCC certification for your company.
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