Volkswagen (VWAGY) is looking to expand its foray into the electric vehicle market with a $2.4 billion investment, the German carmaker said Thursday.

The company is also pursuing a joint venture with Chinese firm Horizon Robotics, a major chipmaker in the world's largest economy. However, the deal is pending regulatory approval.

Following the deal's completion, software firm CARIAD, a subsidy of the carmaker, will hold a 60% majority stake in the joint venture.

The partnership is an effort to "speed up customization of automated driving solutions for the Chinese market," the company said in a statement.

Previously, China had rules blocking foreign companies holding majority stakes in domestic auto firms. The regulations were scrapped in 2020.

"Teaming up with Horizon Robotics will allow Volkswagen to accelerate the development of automated driving as part of our NEW AUTO strategy and drive the repositioning of our China business," Ralf Brandstätter, a Volkswagen management board member said.

The move comes as the auto industry has been ravaged by a global semiconductor shortage. Amid supply uncertainties, some automakers, including Korean firm Hyundai (HYMTF) and Detroit-based Ford (F) have made investments to bring chip production in-house.

For the German automaker, the JV represents an opportunity to "create long- term value in China for the Group and our shareholders in line with expected market development."

Earlier this year, the company saw a 27% increase in EV sales with 217,000 vehicles sold.

Shares of Volkswagen closed Thursday at $16.03, up $0.55, or 3.55%.

Volkswagen