Volkswagen plans to acquire 20% of Chinese battery maker Guoxuan, Reuters reports, accelerating the German giant’s foray into China’s growing EV market. At current prices, the 20% stake would be worth about $560 million.

Volkswagen is currently the top foreign automaker in China, and has set a goal of selling 1.5 million new energy vehicles per year in the country by 2025. The pending deal represents VW’s first direct ownership in a Chinese battery maker.

Reuters describes Guoxuan as a “mid-tier” battery maker, smaller than such industry leaders as CATL and BYD. It is based in the eastern Chinese city of Hefei, where VW is already building EVs with joint venture partner JAC Motor.

Volkswagen is currently building two new EV factories in China: one with partner SAIC that will have an annual capacity of 300,000 vehicles; and another with partner FAW Group in the southeastern city of Foshan.

“By holding a stake in the top Chinese battery makers, carmakers can gain more bargaining power on battery prices,” Shanghai-based auto consultant Yale Zhang told Reuters. “Foreign carmakers are now catching up with their Chinese counterparts on securing battery supplies in China.”

Source: Reuters