Volkswagen is ready to take a 20% stake in Chinese electric vehicle battery manufacturer Guoxuan High-tech, two sources said, because the German company accelerates its electric push into the world’s biggest auto marketplace.
The contract would mark Volkswagen’s first direct ownership in a Chinese battery manufacturer and comes as the Wolfsburg-based auto manufacturer strives to fulfill a target of selling 1.5 million new energy vehicles (NEVs) a year in China by 2025, together with plug-in hybrid automobiles.
The top foreign auto manufacturer in China plans to acquire the stake in Shenzhen-listed Guoxuan through a discounted private share placement in the coming weeks, the two sources with knowledge of the matter stated.
Based on Guoxuan’s market capitalization of $2.8 billion, a 20% stake in the firm today is valued at $560 million.
The contract’s details have been mostly finalized, and the two companies are waiting for new Chinese regulatory rules on private share placements that can provide a more versatile pricing mechanism and shorter lock-up periods for majority stakeholders, stated one of many individuals, speaking on condition of anonymity.
After the stake acquisition, Volkswagen will become the battery manufacturer’s second-largest stakeholder with a 20% holding, behind Zhuhai Guoxuan Trading, an agency controlled by Guoxuan’s founder Li Zhen, which holds 25%.
Guoxuan is amongst a swathe of mid-tier Chinese battery manufacturers behind CATL and BYD.
It’s stationed in China’s eastern metropolis of Hefei, where Volkswagen is also developing EVs with JAC Motor.