BEIJING (Reuters) -Volkswagen Group China plans to boost investment in its only majority-controlled joint venture, according to a Tuesday stock filing by its Chinese partner, as the German automaker expands its business in the world's largest auto market.
Anhui Jianghuai Automobile (JAC Motors), Volkswagen (ETR:VOWG_p)'s partner in its third China JV, said the two sides will boost the JV's registered capital to 13.9 billion yuan ($1.94 billion) from 7.4 billion yuan.
JAC Motors will contribute 1.6 billion yuan to Volkswagen Anhui, while Volkswagen's China division will contribute 4.9 billion yuan, with their holdings in the JV remaining unchanged at 25% and 75% respectively, the Chinese company said in a filing to the Shanghai bourse.
The move came as VW seeks to regain lost ground in the Chinese market where it is exploring local tie-ups to quicken its shift toward electrification.
VW revealed plans in late November to develop a new platform for entry-level electric vehicles in China and use more local components to lower costs, following its July deal with Chinese electric vehicle (EV) upstart Xpeng (NYSE:XPEV) to boost its EV lineup.
VW signed an agreement on the EV-focused 50:50 JV with JAC Motors in 2017. It secured a controlling 75% stake in the venture in 2020 after Beijing relaxed rules that had previously barred foreign firms from owning majority stakes in local auto firms.
The plant of VW Anhui has been producing Cupra Tavascan EVs for exports to markets including Europe.
VW holds a 50% stake in its JV with SAIC Motor Corp while its JV with China FAW Group Co is 60% controlled by FAW.
($1 = 7.1738 Chinese yuan renminbi)