Photo/Li Xing (NBD)

May 28 (NBD) -- Volkswagen is reportedly set to make massive investment in the parent of its China electric vehicle (EV) JV, as well as a leading battery maker, signaling acceleration of the German automaker's expansion in China's EV sector.

According to a Reuters report on Wednesday, Volkswagen is poised to acquire a 50 percent stake in Anhui Jianghuai Automobile Group Holding (Jianghuai) for at least 3.5 billion yuan (491.0 million U.S. dollars).

Volkswagen declined to comment and JAC Motors, of which Jianghuai is the controlling shareholder, did not reply when reached by National Business Daily (NBD).

Shares of JAC Motors (SH.600418) soared by the daily limit of 10 percent on Thursday, the sixth time in the past 7 trading days, which in total sent its shares up 69.3 percent compared with the closing price of May 19.

JAC Motors said Wednesday Jianghuai is preparing to invite a strategic investor, but nothing has been finalized. A Jianghuai employee on Wednesday evening confirmed market speculation that the strategic partner in question is Volkswagen, but said she is unable to provide more details, according to Securities Times.

Moreover, Volkswagen is set to become the biggest shareholder of EV battery maker Gotion High-tech Co. Ltd. (SZ.002074) by acquiring 27 percent of its equity, reported Reuters.

Gotion High-tech has suspended trading of its shares since May 20, saying it is issuing shares to strategic investor via private placement.

The company is one of the largest lithium battery makers in China, third only to CATL and BYD in 2019 in terms of batteries equipped to vehicles.

Tian Weidong, senior consultant in the new energy vehicle sector, said to NBD that Volkswagen aims to bring the battery maker's new technology into the namesake car marque and Audi to hasten the two brand's electrification.

The moves signify Volkswagen's resolution to speed up EV expansion in China, Tian told NBD.

According to its grand plan, Volkswagen is going to manufacture 22 million EVs based on its modular EV platforms PPE and MEB by 2028, and over half of the total will be produced in China.

Industry insiders expect Volkswagen to increase investment in JAC Volkswagen once the stake purchase is concluded, and introduce MEB platforms to the latter.

JAC Volkswagen, established in December 2017, is the German automaker's third China JV after FAW Volkswagen and SAIC Volkswagen.

The two deals are also related to China's quota system that encourages new energy vehicles (NEV), Tian added. As one of the most popular carmakers in China, Volkswagen needs to pay a considerable amount of money to buy NEV credits if its own production fails to reach requirements.

Both deals could be announced as early as Friday, as per Reuters report. 

Email: gaohan@nbd.com.cn