After being riddled with the aftermath of the emission scandal for so many years, German car manufacturing giant Volkswagen made a big push at completely reinventing the company, and one of its most important initiatives was the establishment of an electric vehicle joint venture. It tied up with Chinese company JAC Motors for the joint venture, but it has now emerged that the German company is looking to buy out a major part of JAC’s stake in the venture, according to sources that are close to the developments. Apparently, Volkswagen has also employed the services of Goldman Sachs to advise it on their plans.
China is the world’s biggest automobile market, and when electric vehicles take off, it will almost certainly be the biggest market for those vehicles as well. In such a situation, it perhaps makes sense for Volkswagen to have a larger share of the joint venture. It is also important to point out that the German company remains the biggest overseas producer of cars in the world’s second-biggest economy and this is a move that has been the norm from foreign car manufacturers in China in recent months.
The changes in the regulatory environment in China that allowed foreign car manufacturers to have a larger stake in a joint venture has triggered these buyouts, and it is no surprise that Volkswagen is looking to take advantage of it. In addition to that, this move is also a very clear indication that the carmaker believes that electric vehicles are going to be a big part of its growth strategy in the years to come. A leading media agency contacted Volkswagen regarding the speculation with regards to its buyout plans, but the company did not throw much light upon the affair. It said, “We are carefully watching what the implications are for our business and our joint venture partners. In this regard, we will explore all possible options together with all stakeholders to secure long-term success in China.” However, it is also true that the move is not going to create any tension for the company’s expansion plans in China since, at the end of the day, the parent company of JAC has a large stake from government-owned entities. In such a situation, it is fair to assume that any buyout that takes place will have the blessing of Beijing.