Volkswagen and XPeng are jointly working on two mid-size battery-electric models that incorporate advanced driver-assist software developed by XPeng. The vehicles will be branded as Volkswagens and launched in China in 2026.
German auto giant Volkswagen Group (ETR: VOW3) has reportedly invested $700 million in Chinese EV startup XPeng Inc (HK: 9868). Under the terms of their deal, Volkswagen also acquires a 5% stake in the Chinese EV maker. The companies will collaborate on the development of two new electric vehicles that will first target the Chinese market. As a result, Volkswagen will strengthen its position in China, while XPeng will get a strong shareholder on its board.
Ralf Brandstätter, Volkswagen AG Board Member for China, stated:
“With XPeng, we now have another strong partner that is one of the leading manufacturers in China in key technology areas. In a competitive and dynamic market environment, we are leveraging the strengths of Volkswagen and our partners to create synergies to bring additional products to market faster. In doing so, we focus on the specific needs of our customers in China. At the same time, we want to significantly optimize development and procurement costs.”
It has been revealed that the two models Volkswagen and XPeng are jointly working on are mid-size battery-electric models that incorporate advanced driver-assist software developed by XPeng. The vehicles will be branded as Volkswagens and launched in China in 2026.
Volkswagen Expanding Ties in China
Apart from XPeng, Volkswagen Group has closed a deal with another China-based automaker – Shanghai Automotive Industry Corporation (SAIC). Within the partnership, Volkswagen’s Audi subsidiary and SAIC will jointly develop cutting-edge car models and a novel automotive platform.
Audi and SAIC have been collaborating for two years already. The new deal will expand the existing partnership and allow Audi to encompass the auto segment that it does not yet have access to in the Chinese market.
Jürgen Rittersberger, Member of the Board of Management of AUDI AG responsible for Finance, IT and Legal Affairs, said:
“Following on from the first two successful years of cooperation, we are now strengthening our long-term commitment to SAIC. Our aim is to jointly develop next-generation premium ICV swiftly and efficiently ‘in China for China.’ Even closer cooperation with a local partner such as SAIC supports Audi’s ambition to create a premium market segment for all-electric and fully connected cars in China.”
The two deals come at a time when Volkswagen has seen its sales in China falling. Recently, Volkswagen reported that its deliveries increased 12.8% year-on-year from January to June, registering growth in every region except China. In this region, the company saw a 1.2% drop in total deliveries and a 1.6% drop in battery-electric cars. In addition, Volkswagen entered into a price war with the US EV rival Tesla Inc (NASDAQ: TSLA), which has cut prices and is now significantly outselling Volkswagen cars.
Thus, Volkswagen is expecting the newly signed deals to revitalize its sales in China and improve its stance in the region.
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