Volkswagen in final talks to seal biggest M&A deals in China EV sector

A worker wears a protective mask at the final assembly line for the electric Volkswagen model ID.3 in Zwickau, Germany. REUTERS

Volkswagen AG is in final talks to seal its largest investment deals with Chinese electric vehicle (EV) firms, two sources said, as the German automaker accelerates its push into the world’s largest market for environmentally friendlier cars.

The firm is poised to buy 50 percent of Anhui Jianghuai Automobile Group Holding, the parent of EV partner JAC Motors, for at least 3.5 billion yuan ($491 million), the people said on condition of anonymity as the matter was private.

It is also set to become the biggest shareholder of EV battery maker Guoxuan High-tech Co Ltd, the people said, adding both deals could be announced as early as Friday.

Volkswagen declined to comment on the deals, details of which are reported here for the first time. JAC and Guoxuan declined to comment.

The deals highlight how Volkswagen is keen to retain its status as the largest foreign automaker in China even as government virus-busting measures decimate sales, in the face of encroaching rivals such as Tesla Inc which last year became the first foreign automaker to wholly own a car plant.

A Volkswagen electric ID car is seen during a construction completion event of SAIC Volkswagen MEB electric vehicle plant in Shanghai, China. REUTERS

At the end of last year when 25 million vehicles were sold in China — and just before the coronavirus was first reported in December — the government targeted 25 percent of 2025 annual vehicle sales to be made up of new energy vehicles.

The deals would make Volkswagen the latest foreign automaker to increase ownership in China since the government started to relax ownership rules in 2018, with Germany’s BMW AG quick to take control of its main local venture.

Volkswagen target Anhui Jianghuai, based in the eastern city of Hefei, is fully state owned. It counts its core asset as its 25.23 percent stake in JAC — formally Anhui Jianghuai Automobile Group Corp Ltd, which has a market value of $1.84 billion.

The Anhui provincial office of the State-owned Asset Supervision and Administration Commission declined to comment.

After completing the deal, Volkswagen plans to invest fresh capital in its 50:50 venture with JAC and build capacity with its modular MEB platform, an architecture enabling efficient production of various EV models, said one of the people.

New cars drive during a ceremony marking start of the production of a new electric Volkswagen model ID.3 in Zwickau, Germany. REUTERS

JAC shares surged by their maximum 10 percent on the news on Wednesday, to trade at their highest level since mid-April last year.

Shanghai-listed JAC last week said its parent planned to bring in a strategic investor, which will not cause change in its control.

Volkswagen’s purchase of a stake in Shenzhen-listed Guoxuan, also based in Hefei, would mark it first direct ownership in a Chinese battery maker.

It plans to buy about 27 percent of Guoxuan mostly via a discounted private share placement as well as from top shareholder Zhuhai Guoxuan Trading Ltd, which holds 18 percent, and founder Li Zhen, who owns 12 percent, said one of the people. Son Li Chen also owns 2.5 percent, showed filings to the stock exchange this month.

Based on Guoxuan’s market capitalisation of $4.3 billion, a 27 percent stake is worth $1.16 billion.

Zhuhai Guoxuan and Li Zhen could not immediately be reached for comment.

A Hyundai Motor’s electric car IONIQ is charged at a electric charging station in Seoul, South Korea. REUTERS

Guoxuan has suspended trading of its stock since May 20 and on Tuesday said Zhuhai Guoxuan and Li Zhen would sell part of their holdings to an unidentified strategic investor. It said it will also issue shares to the investor via a private offering.

The deals have yet to be finalised and investment sizes may change as negotiations continue, the people said.

Volkswagen also has ventures with state-owned China FAW Group Corp Ltd and SAIC Motor Corp Ltd. It aims to sell 1.5 million new energy vehicles a year in China by 2025.

“Volkswagen consistently searches for ways to strengthen and deepen our relationships with local partners,” Volkswagen told Reuters. “In this regard we will explore possible options together with all stakeholders to secure long-term success.” (REUTERS)

Related post

Aprilia SXR 125 unveiled in India

From the Hamrobazar blog: https://blog.hamrobazaar.com/aprilia-sxr-125-price-in-nepal/ The Aprilia SXR 125 has been showcased in India, with an announced price tag of INR 1.16 lakhs (ex-showroom). It is expected to arrive in Nepal after a couple of months. The Aprilia brand has made quite a mark amongst the youth here, who continue to be charmed by two […]

Read More

BECOME A DEALER – Crossfire Motorcycles Nepal

Classic Wheels Export & Import Pvt. Ltd. (importer of Crossfire and ItalicaMoto) is looking for new dealers all over Nepal. Interested parties can visit https://crossfirenepal.com/become-a-dealer/. Final date for submission of the form is 31st Baisakh, 2078. For further details or queries, please feel free to contact us at +977 9860687618

Read More

MAW Vriddhi launches Foton showroom in Nepal

MAW Vriddhi Commercial Vehicle Pvt. Ltd., the authorized distributor of Foton Motor in Nepal, has launched its showroom in Balkumari, Lalitpur on 21st March. The new state-of-the-art showroom spreads 2500 square feet of area. As part of Foton’s big plan in Nepal, this showroom is a significant move for the marque. The official opening of […]

Read More

Royal Enfield Interceptor 650: A perfect balance of style and power

It was love at first sight when Royal Enfield launched the Interceptor 650 in India. The retro look and vintage charm of the bike kept me on Youtube for hours on end, looking and marvelling at bike reviews. And when I got the chance to take the Interceptor 650 for a spin, I was over […]

Read More

Bullet Ama: Inspiration to Many

We commonly hear the phrase ‘Age is just a number’ yet see very few scenarios of it being implemented. The society that we live in now, is a constrained bubble where everything and everyone is placed under certain standards that are to be fulfilled, especially for women. There are very few women like Pushpalata Acharya […]

Read More

Shadow Top Brand Shadow