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Volkswagen is considering investing in Chinese electric vehicle technology suppliers to ensure access to core technology in the world's largest car market, according to people familiar with the matter.

Options under discussion include buying stakes or forming joint ventures with Chinese suppliers, especially with companies with electric vehicle technology, according to people familiar with the matter. Targets that Volkswagen may acquire, including battery maker Shang Guoxuan High-tech Co., Ltd.

Volkswagen CEO Dis also said that the Chinese market is a very important production and research center for Volkswagen, and the company expects to deliver 22 million pure electric vehicles worldwide by 2028, half of which will be made in China.

It is not yet clear whether the deal will be brokered, but Volkswagen also said it was reviewing China's battery supply and was negotiating with different local suppliers on cooperation.

A representative of Guoxuan Tech declined to comment on the news.

Previously, Volkswagen has set up joint ventures with SAIC and FAW and is considering buying shares in Anhui Jianghuai Automobile Group, its smallest partner in China.

As part of its strategy, Volkswagen is also considering expanding its three auto joint ventures in China. Volkswagen has said it will provide mobile travel services with its Chinese joint venture partners and launch a small electric vehicle platform for the Chinese market.

Ningde time, BYD and Guoxuan Hi-Tech, the three largest local electric vehicle battery manufacturers, accounted for about 79 per cent of China's new energy vehicle battery market in the first half of this year, according to data.

However, these companies still face challenges as the government gradually removes subsidies that encourage Chinese carmakers to use domestic batteries. Because of this policy change, non-Chinese battery manufacturers such as South Korea's LG Chemical Co., Ltd. are on an equal footing with local competitors.

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