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Auto giant Volkswagen is seeing sales come back stronger than expected in China. Volkswagen China has announced 2.1 billion euros in investments, the largest foreign investment in the auto industry since the outbreak of COVID-19 this year, to up its stake to 75 percent in its joint venture with JAC Motors, as well as investing in battery maker Gotion.
China has so far seen a rebound in its market. Volkswagen had a dramatic 70 to 80 percent fall in February, but in March it was only a 50 percent drop, a marginal but positive gain over last year for Volkswagen. Stephan Wöllenstein, the CEO of Volkswagen China, said the comparison year on year is a "fantastic sign" for the company's development.
According to Volkswagen's latest investment agreement, one billion euros will flow into the joint venture with JAC Motors to increase its stake to 75 percent. Meanwhile, Volkswagen bid for China's domestic well-known battery manufacturer Gotion and will become its biggest shareholder with 26 percent stake.
Wöllenstein told CGTN that the company is not only ambitious with increasing shares on the joint venture but will also join hands with Anhui SASAC for 50-50 control on JAC Motors. The next targets are to diversify the battery supply chain and further promote the electrification strategy.
An employee connects cables between an electric motor and lithium-ion automotive battery on the Volkswagen AG (VW) ID.3 electric automobile assembly line in Zwickau, Germany. /VCG
"About 40 percent cost of an electric vehicle is on the battery," Wöllenstein said. "The trend in the industry recently is now finding the new cell chemistry called LFP. It's lithium iron phosphate battery, which is about 15 to 20 percent cheaper than the traditional lithium-ion battery."
Gotion has been focused on researching and developing LFP for years and made it into China's second-biggest producer of LFP batteries in 2019. Wöllenstein said the corporation with Gotion enables Volkswagen to achieve profitability in a profitable manner without government subsidies.
The series of investments from Volkswagen shows its determination to accelerate electrification in China, and it also reflects its optimistic prospects and investment confidence in China's new energy vehicle market.
In Volkswagen's strategy, the company will launch nearly 70 new electric car models by 2028, and reach sales of 22 million units globally, including 11.6 million units in China. In terms of this, Wöllenstein is seeing more consolidation in the Chinese automotive industry, and this seems to be accelerated under the COVID-19.
(ASIA PACIFIC DAILY)
