Volkswagen to acquire stake in Chinese automaker XPENG

German automaker Volkswagen (VW) is acquiring a 4.99% stake in Chinese automaker XPENG for approximately USD700 million. The company also announced that it  has concluded a technological framework agreement with the Chinese automaker. The initial stage  of the cooperation shall provide for the joint development of two VW brand electric models for the  mid-size segment in the Chinese market. The China-specific vehicles will supplement the MEB  product portfolio and are to be rolled out in 2026 in China. This is subject to the conclusion of final  agreements. 

Meanwhile, Audi, one of Volkswagen’s luxury brands, has signed a strategic memorandum with its Chinese joint venture partner SAIC to further  expand existing cooperation. Joint development activities are to extend the portfolio of fully  connected electric vehicles on offer in the premium segment swiftly and efficiently. It is planned to  start with electric models in a segment where Audi does not as yet have a presence in China.  

The jointly developed e-models are to be equipped with state-of-the-art software and hardware, in order to offer Chinese customers an intuitive, connected digital experience. All parties are  contributing their respective core competencies to the development effort.  

Both agreements also envisage a planned, future joint development of new local platforms for the  next generation of intelligent, fully connected vehicles (ICV). The partnerships aim to swiftly expand  the Volkswagen Group’s product range with further models from China for China in particularly promising customer and market segments. The details of cooperation on future e-platforms are the subject of  further negotiations between the partners. 

“Local partnerships are  an important building block in the Volkswagen Group’s ‘in China for China’ strategy. We are now  accelerating the expansion of our local electric portfolio and at the same time preparing for the next  innovation step. 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 optimise development and  procurement costs.” 

The recently founded Volkswagen Group China Technology Company (VCTC) is the development  partner for XPENG. The new development, innovation and procurement center is the Group’s  largest development location outside Wolfsburg, Germany. Moving forward, this is where more than 2,000  development and procurement experts will work on new intelligent, fully connected electric vehicles.  

Optimising development and procurement volumes generates significant synergy potential with cost  advantages compared with current vehicle projects. 

“In China for China” strategy  

The cooperations tie in with the Group’s “in China for China” strategy to address market-defining  trends in China at an early stage and leverage the growth dynamics and innovative strength of the  Chinese market more effectively. In order to speed up decision-making and development processes  in the region, Volkswagen is strengthening its local capacities for e-mobility as well as digitalization  and autonomous driving.  

To this end, Volkswagen is expanding its Hefei plant in east China’s Anhui Province into a state-of the-art production, development and innovation hub. Production at Volkswagen Anhui’s new vehicle  plant will commence this year. VW Anhui Component Company is building a manufacturing facility  for high-voltage battery systems in Hefei. Furthermore, Volkswagen Group China Technology Company is setting up a development and procurement center for fully connected, intelligent  electric vehicles in Hefei.  

At the same time, the Volkswagen Group is also focusing on partnerships with local high-tech  companies. For Volkswagen Group China, high technology localization and systematic customer  orientation are the key to playing a leading role in the new era of intelligent connected vehicles.