Volkswagen, Xpeng to co-develop two smart electric cars for Chinese market

Volkswagen Group has entered into a master agreement on electric car platform and software collaboration with the Chinese automaker Xpeng, as part of the German brand's outreach to expand its existing EV portfolio quickly and reach new customers in the world's largest EV market. 

The agreement revolves around the joint development of two mid-size e-cars, including an SUV, to be sold under Volkswagen moniker. The electric cars will be equipped with state-of-the-art software and hardware, offering Chinese customers an intuitive, connected digital experience and advanced automated driving functions, the company claims.

It is to be noted that in December last year, Volkswagen Group has acquired about 4.99 per cent of the total issued and outstanding share capital of the Xpeng, following a partnership agreement in July 2023. With the latest pact, an "extended and deeper strategic collaboration" in on the anvil. 

More specifically, the partners have also entered into a joint sourcing program for common vehicle and platform parts used by both the brands. This will enable cost advantages and economic competitiveness of the jointly developed vehicles, given the robustness of the VW Group's supply chain. 

Further, the development time for new vehicles will be down by more than 30 percent, they claim. The Volkswagen China Technology Company (VCTC) in Hefei is acting as a central interface to ensure the best possible synergies at present. 

Ralf Brandstätter, Board Member of Volkswagen AG for China, commented, "In the world's largest and fastest growing EV market, speed is fundamental when it comes to tapping into promising market segments. To constantly increase our local portfolio, we are expanding our own development capacities in China".

"Our 'In China, for China' approach focuses on the specific needs of the Chinese customers. Through the partnership with Xpeng, we are not only accelerating development times, but also boosting efficiency and optimizing cost structures. This increases the economic competitiveness in a highly price sensitive market environment significantly", he added.

"There is no precedent of the strategic partnership between Volkswagen and Xpeng. However, the commitment by both companies and the trust built between our R&D teams over the past eight months have made the success of our project possible", said Xiaopeng He, Chairman and CEO of Xpeng.

He further added, "Combining Volkswagen's highly reputable vehicle development and engineering capability with Xpeng's smart EV technologies, we will deliver the best smart EV products to Chinese consumers. With the long-term vision of our strategic partnership, both parties contribute their best to the partnership".

Volkswagen has already expanded its Hefei site in east China's Anhui Province into a state-of-the art production, development, and innovation hub, for fully connected, intelligent electric vehicles development.