Volkswagen invests $700m in Chinese EV manufacturer XPENG

  • Volkswagen will own a 5% stake in Chinese-owned EV brand XPENG.
  • The move comes in response to Volkswagen and its wider group trying to up its market share in the Chinese EV world.
  • The two companies have agreed to team up on two VW-branded EVs, to be exclusively sold in the Chinese market.

Another EV manufacturer partnership

Volkswagen has reported a deal with Chinese electric car manufacturer XPENG, in which the German giant will invest $700m. This will grant them a 5% stake in the company, as well as space as an observer on XPENG board meetings.

The news fuelled speculation of similar Western and Chinese manufacturer partnerships in the future, with the Financial Times reporting that share prices of local manufacturers Nio and Li Auto rose in response.

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This alliance will kick off with joint development of two electric vehicles, being sold under the Volkswagen brand – but only in China. These models will begin to come to market in 2026, and both will use the same pre-existing platform used on the XPENG G9, its flagship full-size electric SUV. This news comes as many worldwide manufacturers struggle to sell their EVs in China against competitively-priced local options.

This deal follows in the footsteps of Volkswagen’s subsidiary Audi teaming up with SAIC, the manufacturer behind the reborn MG brand, to build China-market only vehicles in order to meet the surging demand for EVs in the country.

Whilst the G9 is being sold in parts of Europe, including Norway, Sweden, Denmark, and the Netherlands, there are no indications that these jointly-developed cars will be exported worldwide.

However, XPENG did note that the two companies would “explore additional potential strategic collaboration” in areas such as future EV platforms, supply chains, and in-car software. XPENG is set on the manufacturing of Intelligent Connected Vehicles (ICV), with its in-house semi-autonomus driving technology in the works.

“We now have another strong partner that is one of the leading manufacturers in China in key technology areas. In a competitive and dynamic market environment, we are 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. At the same time, we want to significantly optimize development and procurement costs.”

Ralf Brandstätter, Board Member for China, Volkswagen AG

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