Published on January 17th, 2020 | by Steve Hanley0
Volkswagen Buys A 20% Interest In Chinese Battery Manufacturer
January 17th, 2020 by Steve Hanley
Quick, name 10 large battery manufacturers. The usual suspects are Panasonic, LG Chem, Samsung SDI, SK Innovation, and Contemporary Amperex. How about Guoxuan? You may have never heard of that Chinese company, but Volkswagen has. This week, it bought a 20% interest in the company worth about $560 million, according to a CNBC News article based on a Reuters report.
Volkswagen is busy building two new electric car factories in China, one with partner SAIC that will have a capacity of 300,000 cars annually and another with partner FAW Group in the southeastern city of Foshan. All those cars will be built on the company’s all new MEB electric car platform, and they will all need batteries.
An anonymous source tells Reuters that Volkswagen has long wanted to own a controlling interest in a battery manufacturer in order to have better control over critical elements of its electric vehicle supply chain. It plans to sell 1.5 million electric cars a year in China by 2024. The deal, which is close to being finalized, will make the German company the second largest shareholder in Guoxuan after Zhuhai Guoxuan Trading, a firm controlled by Guoxuan’s founder Li Zhen. It currently owns 25% of the outstanding shares.
Guoxuan is one of many mid-level Chinese battery makers behind CATL and BYD, says CNBC. It is based in China’s eastern city of Hefei, where Volkswagen is also building electric vehicles with JAC Motor.
“By holding a stake in the top Chinese battery makers, car makers can gain more bargaining power on battery prices,” said Yale Zhang, managing director of Shanghai-based consultancy AutoForesight. “Foreign car makers are now catching up with their Chinese counterparts on securing battery supplies in China.”
A recent report by Wood Mackenzie claimed Volkswagen would the largest maker of electric cars in the world by 2030, surpassing Tesla and all other manufacturers. Plenty of people question that prediction, but there can be little question the Wolfsburg-based company is serious about building and selling electric cars — and lots of them — in the decade to come.
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