Bayerische Motoren Werke AG said Oct. 10 that it will raise its stake in its joint venture with Brilliance China Automotive Holdings Ltd. to 75% from 50%, taking advantage of China's decision to remove a ban on foreign ownership in the country's car industry.

The transaction is valued at €3.6 billion, according to a same-day report by Bloomberg News.

BMW and Brilliance China also agreed to extend the contract of Beijing-based BMW Brilliance Automotive Ltd., which was established in 2003, to 2040 from 2018, following a "successful collaboration" between the companies.

The German luxury car manufacturer also said the JV will spend more than €3 billion for the construction of a new automotive plant and a large-scale expansion of the venture's existing plant at Shenyang "over the coming years." The company also plans to build a new facility in its Tiexi plant and expand the capacity of its Dadong plant.

The investment will raise the venture's production capacity to 650,000 units by early 2020 from nearly 400,000 units in 2017. Last year, two-thirds of BMW's vehicles sold in China were produced by the venture's Tiexi and Dadong plants, the company said. The expansion is expected to create 5,000 new jobs.

As planned, BMW Brilliance Automotive will produce the company's first all-electric vehicle, the BMW iX3 SUV, in China beginning 2020, the automaker added.

In July, BMW and Brilliance China signed an agreement to expand the annual production capacity of the JV to 520,000 vehicles beginning 2019. Around the same time, Bloomberg reported that BMW could raise its interest in the JV as it hopes to become the first foreign carmaker to take advantage of China's new policy on foreign companies.

BMW's acquisition of an additional 25% stake in the JV is subject to approval by Brilliance China's shareholders and relevant authorities.