Volkswagen has announced that it is investing USD700 million (RM3.17 billion) in Chinese electric vehicle maker Xpeng to jointly develop new electrified models for the Chinese market. The deal will see the German automaker obtaining a 4.99% share and an observer’s board seat in Xpeng, Volkswagen China CEO Ralf Brandstaetter said via a LinkedIn post.
According to their technological framework agreement, the two companies are set to introduce two midsize EVs for China in 2026. Both models will be badged as Volkswagens but feature Xpeng know-how on software and autonomous driving, news reports indicate.
The new models are expected to plug a gap in VW’s product lineup in China, where the market for EVs, categorised as new energy vehicles, has grown faster than expected, leaving the German carmaker lagging behind local competitors as well as Tesla.
Brandstaetter said the move will allow Volkswagen to expand its position in China by tapping new customer segments and bringing new intelligent, fully connected EVs to the market in quicker fashion.
“The reason we are doing this is clear. Already, more than 30% of newly-registered vehicles in China are electrified. The tipping point is expected in 2025, when that figure will reach 50%. We will seize this huge market growth potential,” he said in his post.
For Xpeng, the partnership will offer it access to Volkswagen’s supply chain and sourcing capabilities in addition to boosting its reputation through the association and the use of its technology.
Separately, the VW Group also announced plans for further cooperation between Audi and Chinese carmaker SAIC to develop models for China. The models are not yet ascertained, but the company said they will be in a segment Audi isn’t represented in presently.
Meanwhile, in Malaysia, Bermaz Auto (BAuto) was reported to be considering the addition of a Chinese electric vehicle brand to its portfolio. Xpeng is said to to be one of the brands BAuto is engaging with for distribution rights.
GALLERY: Xpeng G9 all-electric SUV
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