XPENG and Volkswagen Group Announce Strategic Partnership in the Electric Vehicle Market

Chinese smart EV company, XPENG Inc., and the Volkswagen Group, one of the world’s leading automobile manufacturers, have recently announced a strategic partnership. The partnership aims to leverage each other’s strengths and foster a long-term, mutually beneficial collaboration in the electric vehicle (EV) market.

As part of the agreement, XPENG and Volkswagen will jointly develop two B-class battery electric vehicle (BEV) models to be sold under the Volkswagen brand in the Chinese market. This collaboration will capitalize on XPENG’s G9 platform and advanced Connectivity and ADAS software, complementing Volkswagen’s renowned design and engineering capabilities.

The production of these models is scheduled to begin in 2026.

The strategic partnership also involves a strategic minority investment by the Volkswagen Group in XPENG. This will result in the issuance of about 4.99% of XPENG’s outstanding share capital to Volkswagen at a rate of US$15 per American depositary share, totaling approximately US$700 million.

However, this share issuance is subject to standard closing conditions, including regulatory approvals.

Moreover, the collaboration opens up possibilities for long-term cooperation in various areas, including future EV platforms, software technologies, and supply chain optimization. Both companies are keen to explore innovative opportunities to further enhance their offerings in the rapidly evolving EV market.

XPENG’s Chairman and CEO, Mr. Xiaopeng He, expressed enthusiasm about the partnership, highlighting the complementary strengths of both companies and their shared commitment to developing cutting-edge Smart EV technologies.

Mr. Ralf Brandstätter, Volkswagen AG Board Member for China, emphasized the importance of local partnerships in the company’s “in China for China” strategy. He noted that the collaboration with XPENG will accelerate the expansion of their local electric portfolio and foster innovations that cater to the specific preferences of Chinese customers, while also optimizing development and procurement costs.

The agreement is currently subject to a project feasibility study, and both parties are eagerly awaiting a positive outcome. This strategic partnership signifies a significant step forward for XPENG and Volkswagen in the electric vehicle market, and their combined efforts are expected to drive greater advancements in the industry, benefiting both companies and consumers alike.