Volkswagen invests €2bn in Chinese electric vehicle sector

Volkswagen is planning a major investment in electric vehicles. (AFP)
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Updated 30 May 2020

Volkswagen invests €2bn in Chinese electric vehicle sector

  • China accounts for 40 percent of Volkswagen’s sales

BEIJING: Volkswagen will invest around €2 billion ($2.2 billion) in two Chinese companies in the electric vehicle sector, calling it “the world’s biggest market.”

The German car giant said it will take a 50 percent stake in JAG — the parent company of state-owned JAC Motors — and increase its holding in the JAC Volkswagen joint venture from 50 percent to 75 percent for around €1 billion.

The group said in a statement that “by gaining management control, Volkswagen is paving the way for more electric models and infrastructure.”

It will also buy a 26 percent share of Chinese battery supplier Gotion High-Tech for €1.1 billion.

China, which accounts for 40 percent of Volkswagen’s sales, has become the world’s largest auto market in recent years, with Beijing repeatedly pledging to support the electric vehicle industry.

China’s industry ministry said in December the country should seek to ensure one in four of all vehicles sold in 2025 were either hybrids or fully electric vehicles.

Beijing decided in late March to extend the tax exemption for the purchase of electric vehicles by two years.

Car sales in China began to slide in 2018 and fell further when the coronavirus pandemic paralyzed the economy but have rebounded as the country appears to have brought the virus under control.

The JAG investment is the first time the German carmaker will take “a strategic role in a state-owned company,” Volkswagen China CEO Stephan Woellenstein said in a statement.

The lifting of coronavirus lockdowns in China has given the auto industry a jumpstart, with sales rising for the first time in two years as the health crisis eases and restrictions on travel and businesses are lifted.

Sales rose 4.4 percent year-on-year in April, according to figures from the China Association of Automobile Manufacturers, driven by strong demand for commercial vehicles, which soared more than 30 percent.

However, the global car industry faces an existential crisis from the pandemic, which has caused sales to plunge as governments forced citizens to stay at home to slow the spread of the virus.

The Volkswagen announcement came as the French automaker Renault announced 15,000 job losses worldwide, and a day after Japanese automaker Nissan reported a huge $6.2 billion annual net loss.

Nissan, already battling weak demand as well as the fallout from the arrest of its former boss Carlos Ghosn, said the global outbreak had hit all aspects of its business.

Nissan said it will shut its Barcelona plant and slash production.


Saudi Arabia’s 6-point plan to jumpstart global economy

Updated 07 July 2020

Saudi Arabia’s 6-point plan to jumpstart global economy

  • Policy recommendations to G20 aim to counter effects of pandemic

DUBAI: Saudi Arabia, in its capacity as president of the G20 group of nations, has unveiled a six-point business plan to jump start the global economy out of the recession brought on by the COVID-19 pandemic.

Yousef Al-Benyan, the chairman of the B20 business group within the G20, told a webinar from Riyadh that the response to the pandemic -— including the injection of $5 trillion into the global economy — had been “reassuring.”

But he warned that the leading economies of the world had to continue to work together to mitigate the effects of global lockdowns and to address the possibility of a “second wave” of the disease.

“Cooperation and collaboration between governments, global governance institutions and businesses is vital for an effective and timely resolution of this multi-dimensional contagion transcending borders,” Al-Benyan said.

“The B20 is strongly of the view there is no alternative to global cooperation, collaboration and consensus to tide over a multi-dimensional and systemic crisis,” he added.

The six-point plan, contained in a special report to the G20 leadership with input from 750 global business leaders, sets out a series of policy recommendations to counter the effects of the disease which threaten to spark the deepest economic recession in nearly a century.

The document advocates policies to build health resilience, safeguard human capital, and prevent financial instability.

It also promotes measures to free up global supply chains, revive productive economic sectors, and digitize the world economy “responsibly and inclusively.”

In a media question-and-answer session to launch the report, Al-Benyan said that among the top priorities for business leaders were the search for a vaccine against the virus that has killed more than half-a-million people around the world, and the need to reopen global trade routes slammed shut by economic lockdowns.

He said that the G20 response had been speedy and proactive, especially in comparison with the global financial crisis of 2009, but he said that more needed to be done, especially to face the possibility that the disease might surge again. “Now is not the time to celebrate,” he warned.

“Multilateral institutions and mechanisms must be positively leveraged by governments to serve their societies and must be enhanced wherever necessary during and after the pandemic,” he said, highlighting the role of the World Health Organization, the UN and the International Monetary Fund, which have come under attack from some world leaders during the pandemic.

Al-Benyan said that policy responses to the pandemic had been “designed according to each country’s requirements.”

Separately, the governor of the Saudi Arabian Monetary Authority said that it was “too early” to say if the Kingdom’s economy would experience a sharp “V-shape” recovery from pandemic recession.