BMW ramps up investment in China to meet electric demand

German automaker BMW says it is taking a majority stake in its China joint venture and investing 3 billion euros ($3.5 billion) in production there as it prepares to meet increased demand for electric vehicles.

Munich-based BMW said Thursday it would pay 3.6 billion euros ($4.2 billion) to raise its stake in BMW Brilliance Automotive Ltd. to 75 percent from 50 percent.

The deal is subject to approval by regulatory authorities and shareholders of Chinese partner Brilliance China Automotive Holdings Ltd.

BMW AG also said it would invest 3 billion euros in new and existing plant facilities in Shenyang, increasing production capacity to 650,000 vehicles a year from the early 2020s. The plants produced 400,000 vehicles last year.

A new plant will be able to produce fully electric, partly electric, and conventional vehicles on the same line.

The Chinese government is pushing automakers to increase the share of alternative energy vehicles, such as battery-only or hybrid cars, in their sales mix. The country is BMW’s single largest sales market, with 560,000 vehicles sold there last year.

BMW is taking advantage of the Chinese government’s plans to end the requirement that foreign auto manufacturers enter into joint ventures with local partners in order to make cars in China. The BMW-Brilliance deal is scheduled to close in 2022, the year the requirement ends.

“With continuous investment, as well as the development and production of electric vehicles, we underline China’s importance as a dynamic growth market for us,” BMW CEO Harald Krueger said in a statement.