Volkswagen in talks to buy stake in Chinese electric vehicle battery maker

The German car maker plans to speed up its expansion in the world’s largest car market with a 20 per cent stake in China’s Guoxuan

Volkswagen is set to take a 20 per cent stake in Chinese electric vehicle battery maker Guoxuan High-tech Co, in a move to accelerate its expansion into the world’s largest car market.

The German car maker plans to buy the stake in Shenzhen-listed Guoxuan via a discounted private share placement in the coming weeks, two people familiar with the situation told Reuters.

Volkswagen and Guoxuan weren’t immediately available for a comment.

If the deal is finalised, Volkswagen will become the battery maker’s second-largest shareholder with a 20 per cent stake, behind Zhuhai Guoxuan Trading, a firm controlled by Guoxuan’s founder Li Zhen, which currently controls 25 per cent.

The stake in Guoxuan would help Volkswagen better control its supply chain in China.

Guoxuan is based in the eastern city of Hefei, where Volkswagen is also building electric vehicles with JAC Motor, one of its several Chinese joint venture partners.

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The news of Volkswagen’s latest push into the electric vehicle market follows comments by its chief executive, Herbert Diess to the company’s senior managers following a global board meeting this week.

Diess said Volkswagen needs to accelerate the overhaul of its business to avoid becoming another Nokia, which lost its dominance in the handset market to Apple.

The multi-brand car and truck maker wants to raise its market value to €200bn euros ($223bn, £170bn), from around €91bn by overhauling assets, cutting costs and branching out into new technologies like connected cars.

FURTHER READING: Volkswagen to produce 1.5m electric vehicles by 2025

FURTHER READING: Volkswagen hit with record dieselgate Australian fine

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