BEIJING, March 1 (AsianFin)-- China’s leading electric vehicle startup Xpeng Inc. is taking a big step toward key partner of Volkswagen Group.
Credit：Xpeng
Xpeng and Volkswagen entered into Master Agreement on Platform and Software strategic technical collaboration, marking a significant milestone in the strategic partnership of both parties. The executed agreements not only accelerate the joint development of the two B-class battery electric vehicles (BEVs) but also pave the way for an extended and deeper strategic collaboration in the future.
As part of the Master Agreement, both parties have entered into a joint sourcing program for common vehicle and platform parts used by both partners. Through this initiative and by leveraging Volkswagen Group's supply chain, the program is meant to provide cost advantages and shall further improve the economic competitiveness of the jointly developed mid-size ICVs.
At the same time, joint purchasing activities and the use of innovative technologies in the design and engineering phase will reduce development time by more than 30%, Vokswagen said. The Volkswagen China Technology Company (VCTC) in Hefei is acting as a central interface to ensure the best possible synergies.
Xpeng said the joint development of B-class BEVs under Volkswagen brand has achieved a major project development milestone. “There is no precedent of the strategic partnership between Volkswagen and XPENG. However, the commitment by both companies and the trust built between our R&D teams over the past eight months have made the success of our project possible,” Xpeng CEO He Xiaopeng commented.
The partnership with Xpeng will enable Vokswagen to supplement our existing portfolio quickly and efficiently with two China-specific vehicles – starting with a SUV, and boh cars will be on the road as early as 2026, said Stefan Mecha, CEO of the VW brand in China.
The latest agreement aims to accelerate a framework agreement on strategic technical collaboration that Xpeng sealed with Volkswagen last July.Volkswagen that month agreed to spend about US$700 million to acquire an about 4.99% stakes in Xpeng, and completed the acquisition in December, thus becoming the third largest shareholder, next to He Xiaopeng and Alibaba Group.
In pursuit of the strategic technical collaboration, Xpeng and Volkswagen will jointly develop two B-class BEV models for sale in the Chinese market under Volkswagen brand, leveraging respective core competencies and Xpeng’s full-stack technologies, from EV platform G9 to Connectivity and advanced driver-assistance system (ADAS) software. The models are expected to start production in 2026. The parties will explore additional potential strategic cooperation in a number of areas, including collaboration on future EV platforms, software technologies and supply chain.
Volkswagen, one of the earliest and most successful international partners of China’s auto industry, is striving to regain market share in the country lost to local competitors. The German automaker last year first ceded its title of the best seller in a year to BYD Co., Ltd, the No.1 EV manufacturer in China.
BYD posted 2.4 million new car registrations in China in the year 2023, thus brought the company a market share of 11%, increasing 3.2% percentage points from a year ago, according to data from the China Automotive and Technology Research Center (CATARC), a state-owned research institute founded in 1965. The figure suggests BYD snapped Volkswagen’s fifteen-year run as China’s best selling auto brand. With a market share of 10.27%, Volkswagen sold around 2.3 million vehicles in China last year, representing a year-over-year (YoY) decrease of 0.2%. Volkswagon has been taken the first place as the best selling brand since 2008, when CATRC data became available.
The agreement for joint development and sourcing with Volkswagon came as Xpeng plans to double down investments to seek survival amid a “bloody sea” of competition. In a letter to employees on February 18, the first working day following Chinese New Year holiday, He Xiaopeng disclosed his company will increase workforce by 4,000 this year, a move to support its ambitious plans including the launch of about 30 new models and revamped models over three years. The new recruitment would expand Xpeng's headcount by 25% from the the latest 15,829 by the end of 2022. He said the EV maker also plans to invest RMB3.5 billion (US$486.36 million) in artificial intelligence (AI) research and development for intelligent driving.
