VW mulls buying stakes in Chinese auto suppliers

Bloomberg August 23 | Updated on August 23, 2019

The Chinese market will take on a bigger role for VW as both a production hub and research centre   -  AFP

Keen on access to battery tech for electric cars push

Volkswagen AG is exploring potential investments in Chinese automotive suppliers as it seeks to secure access to key technology in the world’s largest car market, people familiar with the matter said.

Options under discussion include buying equity stakes or forging joint ventures with Chinese suppliers, particularly firms with technology used in electric vehicles, according to the people. VW has been examining several possible targets including Guoxuan High-Tech Co, a battery maker based in China’s Anhui province, the people said, asking not to be identified because the information is private.

Shares of Guoxuan High-Tech have gained about 5 per cent in Shenzhen trading this year, giving the company a market value of about $2 billion.

Battery technology is a critical area for VW, the world’s biggest automaker, as it seeks to safeguard vast purchasing volumes needed to power the auto industry’s largest push into electric cars, which is led by China. The German carmaker picked China’s Contemporary Amperex Technology Co. as its initial battery provider in the country.

The Chinese market will take on a bigger role for VW as both a production hub and research center, Chief Executive Officer Herbert Diess told reporters in April in Shanghai. The company plans to deliver 22 million fully electric vehicles worldwide by 2028, with more than half of them made in China.

No final decisions have been made, and there’s no certainty the deliberations will lead to a transaction, the people said. VW is in talks with different local suppliers for possible cooperation in the future, the company said in an e-mailed statement.

The evaluation of our battery supply capacities in China is ongoing and necessary for a high volume of e-mobility production, VW said. A representative for Guoxuan declined to comment.

Expanding venture

VW is also considering expanding its three vehicle-making joint ventures in China as part of a strategy review. The company has said will work with partners on mobility offerings and plans to add a smaller electric-car platform specifically for China’s megacities.

VW operates ventures with major Chinese carmakers SAIC Motor Corp. and China FAW Group Co. after being one of the first foreign automakers to start business in the country more than three decades ago. Its also exploring options to acquire a stake in its smallest local partner, Anhui Jianghuai Automobile Group Corp., people familiar with the matter said in April.

China’s top three home-grown electric-car battery makers, CATL, BYD Co. and Guoxuan, dominate the market with about 79 per cent of the country’s new-energy vehicle battery instalments in the first half.

Published on August 23, 2019

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

This article is closed for comments.
Please Email the Editor

You May Also Like