Volkswagen has announced some big moves in China as part of its electrification strategy in the world’s largest auto market. The German giant plans to increase its share in JAC Volkswagen, its joint venture for e-mobility. Around one billion euros is to be invested for this purpose.

The amount includes the acquisition of 50% of the Anhui government-owned entity JAG, the parent company of Volkswagen’s JV partner JAC, and an increase of its stake in JAC Volkswagen (the JV company) from 50 to 75%. By gaining management control of the latter, VW is paving the way for more electric models and infrastructure. The parties intend to close the deal by the end of the year, subject to customary regulatory approvals.

Founded in 2017, the JAC Volkswagen joint venture is an all-electric company which develops, produces and sells new energy vehicles (NEVs). A portfolio expansion of up to five additional full EV models by 2025 is planned, as well as building a full-scale e-model factory and finishing the R&D centre in Hefei.

Separately, Volkswagen will acquire a 26% stake in battery manufacturer Gotion High-Tech for around 1.1 billion euros, becoming the company’s largest shareholder.

An important part of an EV is the battery, and VW acknowledges that securing future battery supply to meet demand will require increased localisation. With the stake in Gotion, VW is the first global automaker to invest directly in a Chinese battery supplier. The deal will not affect ongoing contracts with other battery suppliers, VW says.

According to Wolfsburg, the partnership is an opportunity for it to achieve deeper know-how in the field of batteries. Gotion maintains various current and future projects over the entire battery value chain from sourcing, development and production to recycling. The company is in the process of becoming a certified VW Group battery supplier in China, including supplies for local Modular Electric Drive Matrix (MEB) vehicles.

“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 direct in a Chinese battery supplier. These investments shape the character of Volkswagen in China, making it a more localised, more sustainability-focused mobility company. By opening up the market, China is giving Volkswagen new business opportunities,” said Stephan Wöllenstein, CEO of Volkswagen Group China.

Volkswagen Group China has already outlined its route to becoming a net carbon-neutral company. In 2025, around 1.5 million NEVs are planned for delivery to customers across the country, which is also the world’s biggest market for e-mobility.