BASF said in a statement that it would have a 51% stake in the joint venture, which will make cathode active materials (CAM) and their precursors (PCAM) in China. It plans to invest a mid triple-digit million euro amount, a spokeswoman said.

"By forming the intended joint venture in China, BASF further strengthens its position in Asia to build up an integrated, unique global supply chain for customers in China and worldwide," the Ludwigshafen, Germany-based company said on Thursday.

As a result of the joint venture, BASF will be producing 160 kilotons a year of the materials by 2022, BASF said, adding that it would bring its strong ties to the global car industry to the table in the joint venture.

Shanshan has been involved in the lithium-ion battery industry for over 18 years.

European companies are investing heavily in electric car and battery technologies out of a desire to catch up with Chinese and United States companies who are seen to have stolen a march on German manufacturers who were until recently still wedded to combustion propulsion technologies. Refile: Story corrects to add missing word "million" in para 2

(Reporting by Thomas Escritt; Editing by Kirsti Knolle and Jan Harvey)