On November 6th, Guoxuan High Tech (002074. SZ) announced that the State owned Assets Supervision and Administration Commission of Hefei City has approved the acquisition of 5.30% of the company's shares held by Volkswagen (China) Investment Co., Ltd. (hereinafter referred to as "Volkswagen China") by Hefei Construction Investment Co., Ltd. (hereinafter referred to as "Hefei Construction Investment") for a consideration of 2.317 billion yuan. This is the first substantial reduction in Volkswagen's holdings since becoming the largest shareholder of Guoxuan High Tech with approximately 1.1 billion euros in 2020; Hefei State owned Assets has entered the top shareholder list of this local power battery enterprise for the first time as an important shareholder holding more than 5% of the shares.

On the evening of September 28th, Volkswagen China and Hefei Construction Investment signed a "Share Transfer Agreement", transferring over 96.18 million shares of unrestricted tradable shares at a price of 24.09 yuan per share, accounting for 5.30% of the company's total share capital. The price is about 7.6% lower than the closing price of 26.07 yuan on the signing date, and about 26.7% higher than Volkswagen's 2020 private placement price of 19.01 yuan per share. After the completion of the transaction, Volkswagen China's shareholding ratio decreased from 24.28% to 18.98%, still being the largest shareholder; Hefei Construction Investment has increased its shareholding from zero to 5.30%, becoming a shareholder holding more than 5% of the shares, and has promised not to reduce its holdings within 12 months after the transfer.

Guoxuan High Tech was founded in Hefei in 2006, starting with lithium iron phosphate batteries. In 2015, it was listed on the A-share market through the shell of Dongyuan Electric Appliances, becoming the first power battery company in China. In 2022, it also issued GDR and listed in Switzerland, covering materials, battery cells, systems, and recycling. In May 2020, Volkswagen China subscribed to a private placement for approximately 1.1 billion euros at a price of 19.01 yuan per share, holding 26.47% of the shares and becoming the largest shareholder. It is the first foreign automotive company to directly invest in a Chinese power battery enterprise. Subsequently, due to the expansion of its share capital, its shareholding was passively diluted to 24.28%.

Guoxuan High tech stated in the announcement that the background and purpose of this agreement transfer are twofold: firstly, the transferee Hefei Construction Investment recognizes the company's development prospects and long-term investment value; The second is that the transferor, Volkswagen China, needs to reduce some of its shares due to its own business needs.

In terms of finance, Volkswagen Group's sales revenue for the first three quarters of 2026 was 233.378 billion euros, a year-on-year decrease of 2.2%; Operating profit of approximately 71 million euros, a year-on-year drop of approximately 99%; Global sales decreased by 10.6% year-on-year. Combining the huge losses of battery subsidiary PowerCo with a cost reduction plan of 31 billion euros, choosing to reduce its stake in Guoxuan High Tech will help Volkswagen recoup its funds.

However, the cooperation between Volkswagen and Guoxuan High Tech has been strengthened in other aspects. According to the announcement by Guoxuan High Tech on September 29th, the two parties will jointly build three battery projects in Valencia, Spain, Surani, Slovakia, and Morocco, with a total investment of approximately 3.222 billion euros (approximately 24.62 billion yuan). The two parties will contribute approximately 1.598 billion euros and 1.624 billion euros respectively; The first two projects each hold 50% of the shares, while the Moroccan project Guoxuan High Tech holds 70% of the shares. From the current actions, the relationship between Volkswagen and Guoxuan High Tech is shifting from "equity binding" to "project binding".

The entry of state-owned assets in Hefei also has industrial logic. Previously, the state-owned assets system in Hefei had successively invested in BOE, Changxin Storage, and NIO through the "investment led" model. The "investment led attraction" differs from the traditional investment promotion method of "providing land, factories, and tax incentives". Local governments become shareholders of enterprises directly through equity investment, and the government plays the role of an "investor", with the goal not of short-term financial returns or controlling the enterprise. As one of the leading local enterprises in Hefei, Guoxuan High Tech has entered as an important shareholder through the acquisition of shares by Hefei State owned Assets, further aligning local resources with Guoxuan High Tech's long-term interests.

Regarding the impact and changes that this equity adjustment will bring to the operations of Guoxuan High Tech, Economic Observer interviewed insiders of Guoxuan High Tech, but as of the time of publication, no response has been received.

In terms of market performance, SNE Research data shows that from January to September this year, Guoxuan High Tech's global loading volume was 50.3 GWh, a year-on-year increase of 48.1%, with a market share of 5.1%, narrowly surpassing China Innovation Airlines (50.1 GWh) to rise to the fourth place in the world, second only to CATL, BYD, and LG New Energy; The domestic loading volume is 26.27 GWh, with a market share of 5.33%, an increase of 1.2 percentage points year-on-year, ranking fourth after CATL, BYD, and China Innovation Airlines.

But Guoxuan High tech is facing a situation of "increasing income without increasing profits". According to the third quarter report data, Guoxuan High Tech's revenue for the first three quarters of 2026 was 45.437 billion yuan, a year-on-year increase of 53.98%; The net profit attributable to the parent company was 849 million yuan, a year-on-year decrease of 66.48%; The gross profit margin was 15.48%, a year-on-year decrease of 1.34 percentage points. Among them, the single quarter revenue in the third quarter was 17.662 billion yuan, a year-on-year increase of 74.62%, but the net profit attributable to the parent company was a loss of 537 million yuan, mainly due to changes in the fair value of financial assets and disposal losses of 891 million yuan, combined with exchange losses caused by the appreciation of the Chinese yuan. In the first half of 2026, Guoxuan High Tech's overseas revenue was 9.476 billion yuan, a year-on-year increase of 48.06%, accounting for 34.11% of the revenue.

Recently, there have been frequent changes in equity of power battery companies. On September 4th, Ideal Automobile increased its capital in Xinwangda Power by 2.65 billion yuan. After the transaction was completed, Ideal Group held a total of 11.17% of the shares, becoming the second largest shareholder of Xinwangda Power. On October 29th, Hanxing Venture Capital, a subsidiary of Xiaomi, plans to invest 1.7 billion yuan to increase its stake in Xinwangda Power. After the capital increase is completed, it will hold 5.34% of the shares and become the third largest shareholder of Xinwangda Power. Xiaopeng Motors also stated that it has strategically invested in Innovation Airlines, Xinwangda, and Honeycomb Energy. The increasing equity binding between car companies and power battery companies is driven by the ambition of car companies to lock in production capacity and control the definition of batteries.

For Guoxuan High Tech, Volkswagen's reduction seems to go against the trend, but after the reduction, Volkswagen remains its largest shareholder.