(ATF) Germany’s Volkswagen has bought a substantial stake in Guoxuan High-tech, making it the biggest shareholder of China’s third-largest car battery maker.
Guxuan said Thursday it would sell at least six billion yuan ($839 million) of its stock, representing almost 27% of total shares, to Volkswagen China.
At the same time, Hefei, Anhui-based Guoxuan’s controlling shareholder Zhuhai Guoxuan and its founder Li Zhen transferred a 5% stake to the German auto giant’s Chinese unit.
After completion, Volkswagen China will be the largest shareholder while Li will be the second-biggest.
VW and other Western car manufacturers are scrambling to secure supplies of batteries and battery materials as they ramp up production of electric vehicles (EVs). It plans to produce 1.5 million EVs and other new-energy vehicles in China by 2025.
Li will retain majority voting rights, however; Volkswagen China said it would cede some of its control to 5% less than that of the founding shareholders.
Trade in Guoxuan’s shares rose 10% on the news, and have climbed 30% on the Shenzhen Stock Exchange this month amid rumours of the transaction, which had until now been denied by both parties.