Volkswagen is reportedly nearing a deal to invest more than $490 million in Chinese electric vehicle firms. The move will help accelerate VW’s push to be the largest manufacturer in the market.
The report comes from The Guardian, which spoke to unnamed sources with knowledge of the deal.
Those sources say that VW is looking to buy 50% of Anhui Jianghuai Automobile Group Holding. The holding group is the parent company of JAC Motors, one of VW’s partners in the market.
Until recently, foreign automakers were required to enter the Chinese market through local companies. Anhui Jianghuai is fully state-owned, but China is starting to relax rules on foreign ownership, which allowed Tesla to build its own fully owned factory there.
Following the deal, VW plans to invest again in JAC. That will allow it to build more EVs based on the MEB platform, helping the company earn back the money it invested in the expensive platform.
Neither VW nor Anhui have commented on the deal, but an announcement is expected as early as Friday. That said, the sources were clear to add that the deal is not done yet and negotiations are still ongoing.
Although sales of vehicles have been hammered by the pandemic, sales of electric cars have risen 20%. Fears of public transit may also increase sales of vehicles, in general, once the pandemic has passed.
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