VW May Buy Large Stake in Chinese EV Partner

April 10, 2019 at 11:32 AM

Volkswagen AG is mulling a plan to buy a major stake in Chinese electric-car maker Anhui Jianghuai Automobile Group, sources tell Bloomberg News.

They say VW has retained Goldman Sachs Group to evaluate the potential investment in JAC.

The two carmakers currently operate a 50:50 joint venture to make EVs for the Chinese market. Bloomberg notes that VW aims to directly acquire equity in JAC rather than increase its ownership of their joint venture.

The option to do the latter was is made possible because of a central government policy that has loosened the 50% cap on foreign ownership of carmaking operations. The measure currently applies only to EV companies but will expand to commercial vehicle operations in 2020 and general carmaking in 2022.

Bloomberg sees VW’s would-be investment in JAC, a relatively small carmaker, as a strategic move more likely to succeed than a deal with one of VW’s much larger Chinese partners, SAIC and FAW.