Volkswagen and Chinese EV maker Xpeng say they are jointly developing two mid-sized BEVs for 2026 for mainland China, with the first model being an SUV.
The two automakers signed a “master agreement” for platform and software collaboration, and the two will start jointly sourcing platforms and vehicle parts to help leverage scale while cutting costs, Automotive News Europe reports.
VW announced in July that it was buying 4.99% of Xpeng $700 million with the plan to make two EV models together in 2026. The purchase was completed in December.
Like other legacy automakers, VW is feeling the heat from Chinese rivals in China, and the move to work with Xpeng is targeted at regaining market share in China by combining innovations in design and engineering, slashing development time by more than 30%, the report said.
“In the world’s largest and fastest growing EV market, speed is fundamental,” VW Group board member and China chief Ralf Brandstatter said today.
China is the world’s largest car and EV market, with sales of BEVs accounting for about 60% of the global total.
Cars made through the partnership will carry the VW logo but use a platform developed by both companies that is based on Xpeng’s decade-old Edward technology, which is used on the brand’s G9 model.
Last year, China’s behemoth BYD overtook Volkswagen as the best-selling car brand in China, the first time any carmaker outsold the German brand since at least 2008. Volkswagen had been China’s best-selling brand for 15 years and carries a lot of clout, but times have changed, as the data show that Chinese consumers are buying cheaper, high-tech homegrown EVs these days.
For its part, Xpeng sold 141,601 fully electric cars to mainland customers in 2023, up 17% on the year.
Last year, VW also announced that it would develop another manufacturing platform in China derived from its modular MEB platform for entry-level EVs while using local components to cut costs. VW invested around €1 billion ($1.08 billion) in a new EV development and procurement center in Hefei, China.
While automakers are cutting costs, Xpeng, by contrast, said it was hiring 4,000 people this year and pouring millions of dollars into AI for its EVs.
Photo: XPeng’s newest EV to launch in China, the X9 MPV / Source: XPeng Motors/Weibo
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