Volkswagen is readying to purchase a 20 percent stake in Chinese electric vehicle battery manufacturer Guoxuan, sources tell Reuters.
It is understood that the car manufacturer intends on acquiring the stake in the publically-traded battery maker through a discounted private share placement in the coming weeks. Guoxuan has a current market capitalization of $2.8 billion so a 20 percent stake in the company is worth roughly $560 million.
The deal will mark Volkswagen’s first direct ownership in a Chinese battery maker as it pushes ahead with an ambitious goal of selling 1.5 million new energy vehicles in China annually by the year 2025.
Related: VW’s Robot Chargers Want To Make Every Parking Space A Charging Station
It is claimed that details of the deal have been largely finalized and that the companies are simply waiting for new Chinese regulatory rules on private share placements that will offer a more flexible pricing mechanism and shorter lock-up periods for majority shareholders.
Volkswagen will become the second-largest shareholder in Guoxuan behind a firm controlled by the company’s founder that holds a 25 per cent stake. Neither Volkswagen nor Guoxuan have commented on the deal.
Speaking of the deal, managing director of Shanghai-based consultancy AutoForesight, Yale Zhang, said “By holding a stake in the top Chinese battery makers, carmakers can gain more bargaining power on battery prices. Foreign carmakers are now catching up with their Chinese counterparts on securing battery supplies in China.”
Guoxuan is based in the eastern Chinese city of Hefei where Volkswagen is currently building vehicles with local joint venture partner JAC Motor.
