Volkswagen to Invest $700 Million in Xpeng of China

In order to jointly develop new electrified models for the Chinese market, Volkswagen has announced that it will invest $700 million USD in Chinese electric car manufacturer Xpeng.

According to Volkswagen China CEO Ralf Brandstaetter, the German auto giant would receive a 4.99% stake in Xpeng as well as an observer’s board seat as a result of the agreement.

XPeng P7 front view

The two companies plan to release two midsize electric vehicles (EVs) for China in 2026 in accordance with their technology framework agreement. According to news reports, despite having Xpeng software and autonomous driving expertise, both vehicles will be branded as Volkswagens.

Related: Volkswagen Considers NIO, XPENG, BYD, and CATL of China as Direct Competitors

The new models are anticipated to fill a gap in VW’s lineup in China, where the market for electric vehicles, also known as new energy vehicles (NEVs), has expanded more quickly than anticipated, leaving the German automaker way behind both local rivals and Tesla. According to Brandstaetter, the decision will enable Volkswagen to strengthen its position in China by reaching out to new customer segments and bringing new, fully intelligent EVs to market more quickly. He said:

“The reason we are doing this is clear. Already, more than 30% of newly-registered vehicles in China are electrified. The tipping point is expected in 2025, when that figure will reach 50%. We will seize this huge market growth potential.”

For Xpeng, this agreement will provide it access to Volkswagen’s supply chain and sourcing expertise, in addition to enhancing its profile through the relationship and the usage of Volkswagen’s technology.

91545 Xpeng P7 Wing Limited Edition 2(1)

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