Volkswagen (VW) recently announced its strategic partnership with Chinese automaker Xpeng in an effort to accelerate the launch of electric vehicles (EVs) in China. As part of this partnership, VW will invest $700 million in Xpeng, acquiring a 4.99% stake in the company. In addition to the financial investment, VW will gain access to Xpeng’s technology, particularly its EV platforms, to collaborate on the development of VW EVs for the Chinese market.
This collaboration follows closely after SAIC, China’s largest automaker, revealed its partnership with Audi, another brand under the Volkswagen Group. The agreement between Audi and SAIC will focus on jointly developing Audi EVs based on SAIC platforms for sale in China. In a similar vein, the partnership between VW and Xpeng will center around the joint development of VW EVs for the Chinese market, utilizing Xpeng’s platforms. VW has confirmed its plans to launch two mid-size EV models in early 2026, utilizing the SiC platform that debuted in Xpeng’s G9 mid-size SUV in 2021.
To enhance their future EV offerings, both VW Group brands, Audi and VW, are working with their respective Chinese partners to develop next-generation EV platforms. The specifics of these platforms are currently being negotiated between the automakers and their partners.
The aim of these partnerships is to quickly tap into new market segments in China and offer vehicles that cater to the preferences of Chinese consumers. While both Audi and VW have traditionally been successful in the Chinese market with their gas-powered vehicles, they have faced challenges in capitalizing on the growing demand for EVs in the country.
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One of the factors contributing to their previous struggles is the lack of new EV models. VW Group brands, including Audi and VW, have faced delays due to software issues, resulting in a limited lineup of EVs. In the first quarter of 2023, the combined EV sales of the VW Group in China amounted to just 21,500 units, with only 3,000 units being Audis. In comparison, Tesla recorded sales of 137,000 units over the same period.
In a bid to address these challenges, Audi appointed Gernot Döllner as its new CEO in June. This decision came after criticism from VW Group CEO Oliver Blume, who expressed concerns about Audi’s performance, particularly in relation to EV delays and poor sales in China.
By joining forces with Xpeng, VW aims to leverage the Chinese automaker’s expertise in EV technology and platforms to accelerate their EV market penetration in China. The partnership will allow VW to tap into Xpeng’s advanced EV platforms and potentially expand its EV lineup beyond the two mid-size models planned for 2026.
Furthermore, the collaboration will enable VW to benefit from Xpeng’s strong brand presence and established customer base in China, enhancing its competitiveness in the EV market. Xpeng, on the other hand, stands to gain from VW’s extensive experience and resources in automotive manufacturing and global market expansion.
Overall, these strategic partnerships between VW and Xpeng, as well as Audi and SAIC, symbolize the commitment of the Volkswagen Group to the Chinese market and its efforts to capitalize on the increasing demand for EVs in the country. By collaborating with local automakers and leveraging their expertise, VW aims to overcome its previous challenges and establish a stronger presence in the growing Chinese EV market.
