Volkswagen partners with Xpeng for Chinese electric cars

The Volkswagen Group has invested in Xpeng as part of a long-term partnership that will include Volkswagen models being built on the Chinese EV maker's platforms.

The German giant will invest around $700 million (£540m) to take a 4.99% share in Xpeng – at a rate of $4.99 per share – and take a seat on the company’s board.

Described as a “technological framework agreement”, the partnership will start with the joint development of two mid-size China-only EVs that will be sold by the Volkswagen brand from 2026 onwards.

The agreement will help Volkswagen to expand its EV line-up for the crucial Chinese market, in addition to the brand’s current line-up of ID models, which are based on the VW Group’s own MEB platform.

The group is currently working on a new platform called SSP to succeed MEB, although that has been delayed due to software issues, so the new Xpeng-based models will help to fill the gap.

Xpeng was founded in 2014 and now offers a growing range of premium EVs – including the G9 SUV and P7 saloon – in China and a number of European countries.

The firm recently launched a new SUV, the G6, atop a new bespoke platform called SEPA 2.0. This allows for an 800V electrical architecture, enabling rapid-charging at rates of up to 480kW.

It hasn't yet been confirmed which Xpeng platform the two planned Volkswagen EVs will use.

The agreement follows a partnership between Audi to build future China-only cars using platforms provided by existing joint venture partner SAIC, the parent company of MG.

The first model from that agreement will be “in a segment where Audi does not as yet have a presence in China”.

With both deals, the Volkswagen Group has said that “all parties” will contribute their “respective core competencies” to the development of the machines.

It added that co-operation on future EV platforms was the subject of further negotiations.

The new Volkswagen Group Technology Company will serve as the development partner for Xpeng.

Volkswagen China boss Ralf Brandstätter said: “In a competitive and dynamic market environment, we're leveraging the strengths of Volkswagen and our partners to create synergies to bring additional products to market faster. In doing so, we focus on the specific needs of our customers in China.”

 Xpeng boss He Xiaopeng added: “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 [advanced driver assistance] software in house. We're excited about the opportunity to contribute our expertise to the strategic partnership and create value for Xpeng and our shareholders.”