Volkswagen is exploring purchasing a big stake in its Chinese electric vehicle joint venture partner JAC Motors and has tapped Goldman Sachs as an adviser on the plan, people with direct knowledge of the matter said.

The move by VW, the largest foreign automaker in China, to buy into Anhui Jianghuai Automobile Group (JAC Motors) is the latest by foreign automakers to boost ownership in the world’s biggest car market since Beijing relaxed rules last year. Rival German automaker BMW agreed in October to buy control of its main joint venture in the country for 3.6 billion euros ($4.05 billion). And Daimler AG plans to increase its stake in local partner BAIC Motor.

The stake purchase move shows that JAC would be a key player in VW’s big global bet on EVs and on strong Chinese demand for such vehicles.

VW plans to shift a large part of its planned EV production in China to JAC if it ends up getting control of JAC, said one of the people.

Foreigners were previously prevented from controlling any Chinese automaker or joint venture. Beijing last year removed such caps for firms making fully electric and plug-in hybrid vehicles. Limits on commercial vehicle makers ease in 2020 and by 2022 for the wider car market.

Chinese Premier Li Keqiang promised the European Union on Tuesday that Beijing would no longer force foreign companies to share sensitive know-how when operating in China and was ready to discuss new global trading rules on industrial subsidies. VW, which has a market capitalisation of nearly $85 billion, does not currently own shares in Shanghai-listed JAC, which has a market value of about $1.9 billion, according to Refinitiv data. The German car giant’s plans are at an early stage but it is keen to take a big stake, said three of the people.

Reuters