Volkswagen and its march into the Chinese battery supply chain has once again become the subject of intense speculation. The German automaker is reportedly nearing an agreement to take a majority stake in the country’s third-biggest battery maker Guoxuan High-tech, which was later denied by the battery supplier.

Why it matters: If the deal were made, as reported by local media, the alliance could undermine the monopoly of China’s top electric vehicle battery supplier CATL and change the market landscape now dominated by BYD and Tesla.

  • A deal with Guoxuan High-tech is more likely to happen than with other battery majors for Volkswagen, state-owned China Securities Journal reported citing Yu Qingjiao, secretary general at Zhongguancun New Battery Technology Innovation Alliance.
  • CATL, which earlier this year confirmed alliance with Tesla, has solidified its dominance in the market, while BYD basically produces batteries for its in-house EV business.

Details: As of April. 22, the board of directors has not received any proposed takeover relevant to Volkswagen, as well as any notice over transfer of shares from controlling shareholders and actual controllers, Guoxuan High-tech said late Wednesday in an announcement to investors (in Chinese).

  • Earlier that day, Chinese media reported Volkswagen was about to buy a 30% stake in Guoxuan High-tech, worth $740 million (RMB 5.24 billion), through designated placement and transfer of shares.
  • Volkswagen will become the largest shareholder after the deal is made, the report said, adding that the established OEM intended to go further to be its controlling shareholder over the next three years.
  • Chinese securities regulators late Tuesday urged Guoxuan High-tech to reveal the latest development in its talks with Volkswagen in technological, product, and capital collaboration, according to a letter of inquiry sent by Shenzhen Stock Exchange (in Chinese).
  • Guoxuan reaffirmed that it has been in talks with Volkswagen over a potential partnership in technology, product development, and capital, but has not signed “a substantive, binding agreement,”
  • The Chinese battery maker has been in consultancy over “a funding plan” through private placement, but has not finalized the details including investment amount, which is currently not required for disclosure, the company added.
  • Earlier, authorities asked the Shenzhen-listed battery maker to acknowledge if the report is true and any funding plans exist. Internal review on non-public information leaking was also required, according to the regulatory statement.
  • The Hefei-based battery maker in late January confirmed it was in negotiation with Volkswagen over a potential collaboration but had not signed “a substantive, binding agreement,” following a Reuters report about the German automaker buying 20% shares of the company.
  • Volkswagen and Guoxuan High-tech declined to comment when contacted by TechNode on Wednesday.

Context: Volkswagen’s deliveries in China declined 35% year on-year to around 613,900 units in the first quarter of this year, a better-than-average result compared with a drop by nearly half in the general auto market.

  • The company is on track to locally produce all-electric models built on a dedicated EV architecture, known as MEB, in two plants in Shanghai and southern Foshan city in the second half of this year.
  • The production facilities will have a combined capacity of 600,000 units per year, which is fourfold of that of Tesla’s Shanghai gigafactory, the automaker said in an announcement earlier this month.

This article has been updated to include an announcement released on April. 22, 2020, in which Guoxuan High-tech denied a rumored takeover proposal of Volkswagen buying 30% stake of the company.

Jill Shen is Shanghai-based technology reporter. She covers Chinese mobility, autonomous vehicles, and electric cars. Connect with her via e-mail: or Twitter: @yushan_shen