German legacy automaker Volkswagen invested $700 million in Chinese electric vehicle startup XPeng in exchange for 5% of its stock.
Volkswagen Group seems to be striving to expand in the world’s largest automotive market. As EV-a2z previously reported, its brand Audi has also partnered with China-owned SAIC for an EV-dedicated platform.
VW asserted that these two partnerships aim to “swiftly tap into new customer and market segments.” It expects these initiatives to help the company advance amid China’s EV dominance.
Agreement details
Volkswagen and XPeng
The Volkswagen-XPeng partnership aims to co-develop two mid-size EVs for the German brand, which will target the Chinese market. These new models will apparently augment the company’s MEB model lineup.
As for the schedule, the partnership aims to launch the new models as early as 2026.
VW Group committed about $700 million to the Chinese EV maker to achieve these targets. This amount equates to a 4.99% stock at $15 per American Depositary Share (ADS). For those unaware, 1 ADS is equal to 2 Class A Shares.
In effect, VW Group advances as a shareholder in XPeng, officially gaining an “observer” seat on the company’s board of directors.
“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.”
Ralf Brandstätter, Volkswagen AG Board Member for China
Audi and SAIC Motor
Audi and SAIC already inked a strategic agreement to solidify their existing partnership. It involves co-development technologies to boost Audi’s luxury EV lineup in the Chinese market.
The partnership will initially develop EVs that would give Audi entrants to new segments. These EVs will offer innovative software and hardware technologies that improve customers’ connected digital experience.
“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.”
Jürgen Rittersberger, Member of the Board of Management of AUDI AG responsible for Finance, IT, and Legal Affairs
Interestingly, the two agreements also aim to launch new local vehicle platforms in the future. These will support the German companies’ next-gen smart and connected EV models.
See Also:
- Volkswagen China to shut Shanghai Manual Gearbox Plant
- Volkswagen joins price war in China, offers up to $5,820 off for its ID. series EVs
- Audi to utilize SAIC’s next electric vehicle platform
- Update: Audi to acquire EV platform from SAIC
- Audi to tap Chinese rival for an electric car platform
These significant partnerships will undoubtedly boost VW Group’s portfolio in the Chinese EV market. However, the companies have yet to finalize agreements concerning the planned e-platforms.
It must also be noted that the newly established business unit of Volkswagen Group China Technology Company (VCTC) will collaborate with XPeng in developing new models in the local market.
