Volkswagen AG plans to invest CNY5.22bn (US$746m) to increase its stake in its JAC-Volkswagen joint venture in China from 50% to 75%, according to a Shanghai Stock Exchange filing by its local partner JAC Motors.

The share deal was first confirmed in May and is expected to be completed by the end of 2020, giving the German automaker control of the new energy vehicle (NEV) manufacturer based in Anhui province.

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A local report suggested JAC would also make an additional CNY1.28bn investment in the company.

JAC-Volkswagen would become a key focal point for VW’s powertrain electrification strategy in China with five new electric vehicle (EV) models to be introduced at the plant and annual capacity increased to 250,000 units by 2025.

Two EV models based on VW’s MEB platform will be launched by early next year. 

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Volkswagen Group China CEO Stephan Woellenstein said the plant would “not compete head-on” with VW’s two other joint ventures in China, FAW-Volkswagen and SAIC-Volkswagen which have their own electric and plug-in hybrid vehicle programmes.

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VW is targeting 1.5m annual NEVs sales by 2025 and plans to invest EUR1.6bn in vehicle electrification and digitalisation in China in 2020 alone.

Woellenstein added “China is determined to make NEVs a success and VW is determined to make it a success, and I am confident it will happen.”

The company sold 1.59m vehicles in China under its VW, Jetta, Skoda, Audi and Porsche brands in the first half of 2020, down 17% year on year compared with a 22% decline in the total vehicle market.

The CEO expects the group sales decline to narrow to single digits over the full year.