(Yicai) March 13 -- Jianghuai Automobile Group, a Chinese carmaker better known as JAC Motors, and German auto giant Volkswagen Group will jointly invest CNY6.5 billion (USD905 million) into their new energy vehicle joint venture in China.

JAC Motors will inject CNY1.6 billion into Volkswagen Anhui Automotive, which started production at the end of last year, with Volkswagen China Investment, a unit of the Wolfsburg-based carmaker, providing the rest, JAC Motors announced late yesterday. The JV's registered capital will increase to CNY13.9 billion (USD1.9 billion), it added.

The capital increase aims to deepen the tie-up between JAC Motors and Volkswagen and help Volkswagen Anhui enhance its overall strength and risk resistance capabilities, the Chinese carmaker noted. The pair's stakes in the Hefei-based JV will remain at 25 percent and 75 percent, respectively, it added.

The capital injection will be fully paid in cash and disbursed in installments this year and next, JAC Motors pointed out.

Volkswagen Anhui was established as a 50:50 JV in 2017. It was Volkswagen's third venture in China, with the German carmaker increasing its holding to 75 percent in December 2020 after the country allowed foreign carmakers to hold a majority stake in auto JVs.

Volkswagen Anhui focuses on research and production of NEVs. Its first model, the coupe sports utility vehicle Cupra Tavascan, went into production last December, with exports to Europe to start this year.

Another Volkswagen model should also begin production in China this year, Ralf Brandstätter, chief executive officer of Volkswagen Group China, said last July.

Volkswagen has been increasing its investments in China to accelerate its electrification process. It bought a 5 percent stake in Chinese electric vehicle startup Xpeng Motors for USD700 million last year, with two mid-sized EVs developed through this tie-up expected to begin production in Hefei in 2026.

Editor: Martin Kadiev