Volkswagen spending $2.2 billion to expand in China’s electric car market

Volkswagen AG said Friday it will buy control of its electric vehicle venture with a Chinese partner in a 1 billion euro ($1.1 billion) deal.

Beijing: Volkswagen is spending 2 billion euros ($2.2 billion) to expand its presence in China’s electric car industry in the biggest foreign investment announced since the country’s economy began to reopen following the coronavirus pandemic. Volkswagen AG said Friday it will buy control of its electric vehicle venture with a Chinese partner in a 1 billion euro ($1.1 billion) deal. The German automaker said it would spend another 1 billion euros ($1.1 billion) to become the biggest shareholder in a battery producer.

The ruling Communist Party scrapped limits on foreign ownership of electric vehicle makers in 2018 to promote industry development. Beijing sees electric cars as a profitable technology where China can become a global leader. China accounts for about half of global electric car sales but demand has slumped as Beijing wound down multibillion-dollar subsidies and shifted the burden to automakers by imposing sales quotas. Sales of pure-electric and gasoline-electric hybrid models fell 43.4% in the first four months of this year from a year earlier to 205,000 vehicles.

VW, General Motors Co., Nissan Motors Co. and other brands are spending heavily to develop models that can compete on price, range and features without subsidies.