Volkswagen Group is consolidating its position in the Chinese auto market and advancing its electrification strategy in the country through partnerships between the Volkswagen brand and Chinese electric vehicle maker XPeng, as well as Audi and SAIC.
German auto giant Volkswagen announced on 26 July that the Volkswagen brand and XPeng have entered into a technology framework agreement as part of their strategic partnership. Focusing initially on the Chinese midsize car market, they will co-develop two electric models under the Volkswagen brand. These new vehicles, tailored specifically for the Chinese market and based on the MEB platform, are scheduled to go on sale in 2026, pending a final agreement.
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As an important part of this long-term strategic partnership, the Volkswagen Group will invest approximately $700 million in XPeng, acquiring approximately 4.99 per cent of XPeng's shares by way of a capital increase at a price of $15 per American Depositary Share. Upon completion of the transaction, Volkswagen Group will take an observer seat on the board of directors of XPeng. The issuance of the shares is subject to customary closing conditions, including regulatory approvals.
Similarly, Audi and its Chinese joint venture partner SAIC have signed a strategic memorandum of understanding to further deepen their existing cooperation. They aim to expand their portfolio of premium, smart and connected electric vehicles in the premium car market quickly and efficiently. As a first step, Audi plans to enter a previously untapped niche market in China by launching new electric models.
In addition, the two agreements also plan to jointly develop a new localised platform for the next generation of Intelligent Connected Vehicles (ICVs). These co-operations are aimed at rapidly expanding the Group's product range and creating more "in China, for China" models to meet the diversified needs of China's large and promising customer base and market segments. Details of future co-operation on electric vehicle platforms will be further negotiated between the parties involved.
Ralf Brandst ä tter, Member of the Board of Directors of Volkswagen Group China, said: Local co-operation is an important part of the Volkswagen Group's "In China, For China" strategy. We are currently accelerating the expansion of our local electric vehicle portfolio while preparing for the next step in innovation. In a competitive and dynamic market environment, we are leveraging the strengths of Volkswagen and our partners to create synergies in order to bring more products to market quickly. In this process, we will focus on the special needs of our Chinese customers. At the same time, we want to significantly optimise development and procurement costs.
Volkswagen Group (China) Technology Corporation ("VCTC"), a recently established technology company, will serve as XPeng's development partner.VCTC will bring together research and development, innovation and purchasing functions, making it the Volkswagen Group's largest research and development site outside of Wolfsburg.VCTC, with more than 2,000 specialists in R&D and purchasing, and will work on the development of cutting-edge, smart, internet-connected electric vehicle models.
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