VOLKSWAGEN AG is in final talks to seal its largest investment deals with Chinese electric vehicle (EV) firms, two sources said, as the German automaker accelerates its push into the world’s largest market for environmentally friendlier cars.

The firm is poised to buy 50 percent of Anhui Jianghuai Automobile Group Holding, the parent of EV partner JAC Motors, for at least 3.5 billion yuan (US$491 million), Reuters quoted the sources as saying yesterday.

It is also set to become the biggest shareholder of EV battery maker Guoxuan High-tech Co., the sources said, adding both deals could be announced as early as tomorrow.

The deals highlight how Volkswagen is keen to retain its status as the largest foreign automaker in China even as government virus-busting measures affected sales, in the face of encroaching rivals such as Tesla Inc.

The deals would make Volkswagen the latest foreign automaker to increase ownership in China since the government started to relax ownership rules in 2018, with Germany’s BMW AG quick to take control of its main local venture.

Volkswagen target Anhui Jianghuai, based in the eastern city of Hefei, is fully State owned. It counts its core asset as its 25.23 percent stake in JAC, formally Anhui Jianghuai Automobile Group Corp. Ltd., which has a market value of US$1.84 billion.

After completing the deal, Volkswagen plans to invest fresh capital in its 50:50 venture with JAC and build capacity with its modular MEB platform, an architecture enabling efficient production of various EV models, said one of the sources.

Volkswagen’s purchase of a stake in Shenzhen-listed Guoxuan, also based in Hefei, would mark it first direct ownership in a Chinese battery maker.

(SD-Agencies)