Volkswagen and XPENG forge EV partnership for rapid development of new models

  • XPENG, Volkswagen sign Master Agreement for EV collaboration in platform and software development.
  • Joint Sourcing Programme to cut costs, leveraging scale and VW’s supply chain.
  • Accelerated joint development of smart electric cars, starting with an SUV for Volkswagen’s mid-size segment in China.

Volkswagen and XPENG sign collaborative Master Agreement and Joint Sourcing Programme to fast-track EV development in China

XPENG Inc. and the Volkswagen Group have formally entered into a Master Agreement on Platform and Software strategic technical collaboration. This development represents a pivotal juncture in their joint pursuit of B-class battery electric vehicles (BEVs) under the Volkswagen brand. Furthermore, it exemplifies the successes of Chinese manufacturers in Europe, as two automotive giants come together.

Concurrently, a Joint Sourcing Programme has been set in motion by these automotive giants. The programme’s aim is a collaborative effort to cut platform costs by leveraging the scale of both companies and tapping into the Volkswagen Group’s world-class supply chain. This collaborative push seeks to attain substantial synergies, enhancing the competitiveness of the B-class BEVs in shared development.

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A major point of the collaboration is the accelerated joint development of two smart electric cars. The initial model will be a fully electric SUV. These intelligent connected vehicles will expand Volkswagen’s brand portfolio in the mid-size segment. 

The collaboration highlights Volkswagen’s ‘In China, for China’ strategy. This initiative addresses the diverse needs of Chinese customers and explores novel market segments. The joint venture is to be on the roads by 2026. That means the collaborative development will reduce time to market by more than 30%, accompanied by the joint sourcing programme.

Mr. Xiaopeng He, Chairman and CEO of XPENG, stated:

“The signing of the Master Agreement represents another significant milestone we achieved together with our partner Volkswagen Group. 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. Combining Volkswagen’s highly reputable vehicle development and engineering capability with XPENG’s Smart EV technologies, we will deliver the best smart EV products to Chinese consumers.

With the long-term vision of our strategic partnership, both parties contribute their best to the partnership. We have started to realize synergies through our Joint Sourcing Programme. I firmly believe there is a lot of upside potential to this partnership that we can explore.”

The rapid sealing of the Master Agreement underscores the immense potential of this collaboration. The brands are coming together to hit the EV market quickly and efficiently. Seeing major automakers from Europe and China collaborating to align supply chains and speed up development could be a mark of the future of the sector.

Ralf Brandstätter, Board Member of Volkswagen AG for China: 

“In the world’s largest and fastest-growing EV market, speed is fundamental when it comes to tapping into promising market segments. To constantly increase our local portfolio, we are expanding our own development capacities in China. Thereby, consistently following our strong “in China, for China” approach focusing on the specific needs of the Chinese customers. Through the partnership with XPENG, we are not only accelerating development times, but also boosting efficiency and optimizing cost structures. This increases the competitiveness in a highly price sensitive market environment significantly.”

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