HONG KONG/BEIJING: Volkswagen AG is set to take a 20 per cent stake in Chinese electric vehicle battery maker Guoxuan High-tech Co Ltd, two sources told Reuters, as the German firm accelerates its electric push into the world’s largest auto market.
The deal would mark Volkswagen’s first direct ownership in a Chinese battery maker and comes as the Wolfsburg-based automaker strives to meet a goal of selling 1.5 million new energy vehicles (NEVs) a year in China by 2025, including plug-in hybrid cars.
The top foreign automaker in China plans to acquire the stake in Shenzhen-listed Guoxuan via a discounted private share placement in the coming weeks, the two sources with knowledge of the matter said. Based on Guoxuan’s market capitalisation of $2.8 billion, a 20 per cent stake in the company at present is worth about $560 million.
The deal’s details have been mostly finalised and the two firms are waiting for new Chinese regulatory rules on private share placements that will provide a more flexible pricing mechanism and shorter lock-up periods for majority shareholders, said one of the people, speaking on condition of anonymity.
After the stake purchase, Volkswagen will become the battery maker’s second-largest shareholder with a 20 per cent stake, behind Zhuhai Guoxuan Trading Ltd, a firm controlled by Guoxuan’s founder Li Zhen, which currently holds 25 per cent.
Shares in Guoxuan surged by their maximum 10 per cent on the news on Friday to trade at their highest level since March last year.
Volkswagen declined to comment. Guoxuan and the China Securities Regulatory Commission did not immediately respond to requests for comment from Reuters.
An executive at Guoxuan’s board secretary’s office told the government-backed Securities Times newspaper it had not yet received news about a stake acquisition. Guoxuan is among a swathe of mid-tier Chinese battery makers behind CATL and BYD. It is based in China’s eastern city of Hefei, where Volkswagen is also building electric vehicles with JAC Motor, one of a number of its Chinese joint venture partners.
A third source, who declined to be named due to the sensitivity of the matter, said Volkswagen has long wanted to control a battery maker to better manage its supply chain. To achieve its NEV sales goal in China, Volkswagen has built a new $2.5 billion electric vehicle plant with partner SAIC Motor that will have annual output capacity of 300,000 cars and is also revamping manufacturing facilities in China’s southeastern city of Foshan to build electric cars with partner FAW Group.
— Reuters
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