Volkswagen Group to Take Stake in China's XPENG; Announce Strategic Partnership

China's XPENG and the Volkswagen Group have entered into a framework agreement on strategic technical collaboration and a share purchase agreement for strategic minority investment by the Volkswagen. The investment is approximately US$700 million in XPENG and VW will ultimately hold about 4.99 percent of XPENG's shares.

The two companies will jointly develop two B-class battery electric vehicles (BEV) models for sale in the Chinese market under Volkswagen brand, leveraging respective core competencies and XPENG’s G9 platform and Connectivity and ADAS software.

The models are expected to start production in 2026.

They will also explore additional potential strategic cooperation in a number of areas, including collaboration on future EV platforms, software technologies and supply chain.

XPENG is headquartered in Guangzhou, China, with main offices in Beijing, Shanghai, Silicon Valley, San Diego and Amsterdam.

Its Smart EVs are mainly manufactured at its plants in Zhaoqing and Guangzhou, Guangdong province

Mr. Xiaopeng He, Chairman and CEO of XPENG, says: “The Volkswagen Group and XPENG each brings in highly complementary strengths into this long-term strategic partnership. We will share Smart EV technologies and world-class design and engineering capability with each other and learn from each other. Since the founding of XPENG, we have been developing full-stack technologies from EV platform to Connectivity and ADAS software in house. We are excited about the opportunity to contribute our expertise to the strategic partnership and create value for XPENG and our shareholders.”

Mr. Ralf Brandstätter, Volkswagen AG Board Member for China, comments: “Local partnerships are a key building block in the Volkswagen Group’s ‘in China for China’ strategy. Together with XPENG, we are now forming a strong cooperation and speeding up the expansion of our local electric portfolio and at the same time preparing ourselves for the next step change in innovation. In an intensely competitive and dynamic market environment we are leveraging the partners’ core competences, thus creating synergies to bring additional products to market faster – aligned with the special wishes of Chinese customers. At the same time, we can significantly optimize development and procurement costs.”

As of the end of 2022, Volkswagen Group China has over 90,000 employees in China.