The Volkswagen Group is deepening its presence in the fast-paced Chinese e-mobility market through two strategic partnerships with local automakers XPENG and SAIC, involving its VW and Audi brands, respectively. The partnership entails the co-development of intelligent, fully connected electric vehicles (ICVs) for the Chinese market, with plans to introduce additional models to further tap into the burgeoning customer segments.
Why It Matters
These alliances underscore Volkswagen Group’s “in China for China” strategy and the importance of China’s rapidly growing e-mobility market. By swiftly expanding its offerings in the country, Volkswagen Group aims to take full advantage of China’s dynamic market, simultaneously boosting local development capacities and aligning with Chinese customer preferences.
Key Points
- The VW brand has sealed a long-term technological agreement with XPENG for joint development of two electric mid-size models, specific to China. These vehicles will augment the existing MEB product portfolio and are slated for launch in 2026.
- Volkswagen Group is investing around US$700 million in XPENG through a capital increase, acquiring a 4.99% stake at US$15 per ADS(*). This move also earns Volkswagen a seat as an observer on XPENG’s board of directors.
- Audi and SAIC have signed a memorandum to expand their existing cooperation, with the intention of rapidly extending their portfolio of connected EVs in the premium segment.
- Both agreements envisage future joint development of local platforms for next-generation ICVs.
Bottom Line
The Volkswagen Group’s partnerships with XPENG and SAIC strengthen their position in China’s e-mobility market. With the ‘in China for China’ strategy, Volkswagen is tailoring its products to local customer needs, increasing development efficiencies, and reducing procurement costs. The new alliances mark a significant stride towards a more sustainable and connected future in the world’s largest automotive market.
Ralf Brandstätter, a Board Member of Volkswagen AG for China, emphasizes the importance of local partnerships in expanding their electric portfolio while preparing for the next innovation step. “We are leveraging the strengths of Volkswagen and our partners to create synergies and bring additional products to market faster,” Brandstätter said.
In the spirit of these collaborations, the recently founded Volkswagen Group China Technology Company (VCTC) will take up the development responsibility for the new Volkswagen models. With over 2,000 development and procurement experts, VCTC is set to become the group’s largest development location outside Wolfsburg.
(*) ADS = American Depositary Share, 1 ADS represents 2 Class A Shares.
