Friday was a big day for the world of electric vehicles, and specifically for German carmaking giant Volkswagen who announced it will invest 2 billion euros ($2.2 billion) in two Chinese companies in the electric vehicle industry.
Moreover, Volkswagen stated that it will invest a further 1.1 billion euros in a Chinese battery supplier.
The carmaker mentioned it was hoping to push forward the "world's biggest market" in electric vehicles.
China as the world's largest auto market
Volkswagen also mentioned that it will take a 50% stake in JAG, the parent company of state-owned JAC Motors, as well as an increase in its holding in JAC Volkswagen from 50 to 75 percent. In its statement, the company mentioned its reasons for these moves: "by gaining management control, Volkswagen is paving the way for more electric models and infrastructure."
Furthermore, it'll also buy a 26% share of battery supplier Gotion High-Tech for 1.1 billion euros ($1.2 billion).
China accounts for 40%of Volkswagen's worldwide sales and has become the world's largest automaker in the past few years. Beijing has repeatedly stated its motivation in moving towards more electric vehicles and it's looking to ensure that one in four of all vehicles sold in the country in 2025 onwards is to be electric or hybrid vehicles.
Moreover, China has also incentivized the buying of electric vehicles by extending tax exemptions for anyone buying one by two years.
Dr. Herbert Diess, CEO of Volkswagen AG, said in the statement "Together with strong and reliable partners, Volkswagen is strengthening its electrification strategy in China. The electric car 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."
And Dr. Stephan Wöllenstein, CEO of Volkswagen Group China added "I am delighted with this strategic milestone in our mutual and trusted relations 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. "
He continued "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."