27/07/2023 (China) - Volkswagen partnered with Chinese EV startup Xpeng and joint venture partner SAIC to build new models and potentially co-create platforms, as it attempted to use local expertise to protect its market share.
The Volkswagen brand collaborated with Xpeng Inc to produce two models targeting the middle-class segment. These models carried the VW logo but featured Xpeng's know-how on software and autonomous driving, providing a win for the relatively young EV startup.
The new models, which were scheduled to be rolled out from 2026, aimed to fill a gap in Volkswagen's product lineup in China. The market for "new energy vehicles" in China had grown faster than expected, and Volkswagen was lagging behind local competitors and Tesla.
Volkswagen faced significant investor pressure regarding its China presence, focusing on boosting EV sales and addressing labor rights issues in the Xinjiang region, where it co-owned a plant with SAIC.
To strengthen its position, Volkswagen invested approximately $700 million in Xpeng and acquired a 4.99% stake in the company. The carmaker's China Chief, Ralf Brandstaetter, had consistently emphasized the importance of collaborating with local actors in the Chinese market. Xpeng was the latest addition to a series of partnerships with Chinese firms, including battery-maker Gotion and technology firm Horizon Robotics.
For Xpeng, a smaller player in China's EV sector, the partnership provided access to Volkswagen's supply chain and sourcing capabilities, as well as enhanced reputation for its platform and technology, as noted by Daniel Roeska of Bernstein Research.