The VW brand has signed a technological framework agreement with XPENG. The initial stage of the cooperation involves the joint development of two VW brand electric models for the mid-size segment in the Chinese market. These vehicles will complement the existing MEB product portfolio and will be launched in China in 2026, subject to final agreements.
As part of the strategic cooperation, the Volkswagen Group will invest approximately US$700 million in XPENG, a Chinese manufacturer of intelligent electric cars. Volkswagen will acquire a 4.99 percent stake in XPENG through a capital increase, at a price of US$15 per ADS (*). Volkswagen will also have a seat as an observer on the XPENG board of directors. The share issuance is subject to customary closing conditions and regulatory approvals.
Audi has signed a strategic memorandum with SAIC, its Chinese joint venture partner, to expand their ongoing cooperation. The goal is to quickly and efficiently develop a portfolio of fully connected electric vehicles in the premium segment. The collaboration will begin with electric models that Audi currently does not offer in China.
The jointly developed e-models will feature advanced software and hardware, providing a connected digital experience for Chinese customers. Each partner will contribute their core competences to the development process.
Furthermore, both agreements include plans for future joint development of new local platforms for the next generation of intelligent, fully connected vehicles (ICV). These partnerships aim to expand the Group’s product range with additional models specifically tailored to the Chinese market, targeting promising customer and market segments. The details of cooperation on future e-platforms will be further negotiated between the partners.
Ralf Brandstätter, Volkswagen AG Board Member for China, stated: “Local partnerships are an important part of the Volkswagen Group’s strategy in China. We are accelerating the expansion of our local electric portfolio and preparing for the next step of innovation. With XPENG, we have gained another strong partner that excels in key technology areas in China’s competitive and dynamic market. By leveraging the strengths of Volkswagen and our partners, we can bring products to market faster and focus on the specific needs of our customers in China, while optimizing costs for development and procurement.”
Volkswagen Group (China) Technology Company takes responsibility for developing new Volkswagen models
The recently established Volkswagen Group China Technology Company (VCTC) will serve as the development partner for XPENG. This new center, located in Hefei, is the largest development location for the Group outside of Wolfsburg. Over 2,000 development and procurement experts will work on new intelligent, fully connected electric vehicles.
Efficient development and procurement processes will generate significant synergy potential and cost advantages compared to current vehicle projects.
Partnerships as part of the Group’s “in China for China” strategy
These collaborations align with the Volkswagen Group’s “in China for China” strategy, which aims to address market trends in China and leverage the growth and innovation of the Chinese market more effectively. To expedite decision-making and development processes in the region, Volkswagen is strengthening its local capacities for e-mobility, digitalization, and autonomous driving.
To achieve this, Volkswagen is expanding its Hefei plant in Anhui Province, turning it into a state-of-the-art production, development, and innovation hub. Production at the new vehicle plant in Hefei is set to begin this year. Additionally, VW Anhui Component Company is constructing a manufacturing facility for high-voltage battery systems in Hefei. Volkswagen Group China Technology Company is also establishing a development and procurement center for fully connected, intelligent electric vehicles in Hefei.
The Volkswagen Group is also prioritizing partnerships with local high-tech companies. For Volkswagen Group China, localized high technology and customer-oriented approaches are key to playing a leading role in the era of intelligent, connected vehicles.
(*) ADS = American Depositary Share, 1 ADS represents 2 Class A Shares
Quotes from the partners
VW brand and XPENG
He Xiaopeng, Chairman and CEO of XPENG: “The Volkswagen Group and XPENG each brings highly complementary strengths into this long-term strategic partnership. We will share Smart EV technologies and world-class design and engineering capability with each other and learn from each other. Since the founding of XPENG, we have been developing full-stack technologies from EV platform to connectivity and ADAS software in-house. We are excited about the opportunity to contribute our expertise to the strategic partnership and create value for XPENG and our shareholders.”
Stefan Mecha, CEO VW Brand Region China: “The VW brand has a long-term electrification strategy for the Chinese market. We will continue to rely on our high-performance MEB and SSP architectures. With the growth of the electric segment, there are now more market opportunities that we want to explore. By partnering with XPENG, we plan to introduce two additional fully connected electric vehicles starting from early 2026, thus attracting new customer groups for the VW brand.”
AUDI AG and SAIC
Jürgen Rittersberger, Member of the Board of Management of AUDI AG responsible for Finance, IT, and Legal Affairs: “Audi has a strong electrification plan for the world’s largest automotive market. This step is a continuation of our plan. Building on the successful cooperation in the past two years, we are further committing to SAIC for the long term. Our goal is to jointly develop next-generation premium ICVs quickly and efficiently ‘in China for China’. Closer collaboration with a local partner like SAIC supports Audi’s ambition to establish a premium market segment for all-electric, fully connected cars in China.”
Zu Sijie, Vice President and Chief Engineer of SAIC Group: “SAIC and Audi have signed a memorandum of understanding. Both parties will accelerate SAIC Audi’s development of the model portfolio for electrification, leveraging the advantages of both sides to meet the needs of Chinese customers for premium electric intelligent connected vehicles. With SAIC contributing technology and actively participating in joint product development, we are embarking on a new chapter in joint venture cooperation, aiming for a win-win situation.”