Volkswagen and China’s XPENG Agree Joint Development of Two Smart E-Cars

Volkswagen and XPENG have entered into a Master Agreement on platform and software collaboration, marking a significant milestone in their strategic partnership. The Master Agreement centres on the initial joint development of two mid-size Volkswagen brand vehicles, which will launch first with a SUV.

The agreement will enable the VW brand to expand its existing portfolio quickly, to reach new target customer groups in the fast-growing EV market in China.

Stefan Mecha, CEO of the VW brand in China, said: “The Volkswagen brand is continuously expanding its range of electric cars for Chinese customers. Through the partnership with XPENG, we are gaining further momentum. Both partners contribute their respective strengths to the joint development, which enables us to supplement our existing portfolio quickly and efficiently with two China-specific vehicles – starting with a SUV.

The agreement also paves 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 significantly reduce development time by more than 30 percent. The Volkswagen China Technology Company (VCTC) in Hefei is acting as a central interface to ensure the best possible synergies.

Ralf Brandstätter, Board Member of Volkswagen AG for China, said: “In the world’s largest and fastest growing EV market, speed is fundamental when it comes to tapping into promising market segments.”

Xiaopeng He, Chairman and CEO of XPENG added: “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.”