Volkswagen Expands Partnership with Xpeng to Develop New EV Models and Technologies
Volkswagen and Xpeng extend collaboration to develop intelligent driving systems. Joint development of electrical/electronic architecture to enhance EV capabilities. First car with jointly developed system to be launched within 24 months.
The two companies have signed an agreement to jointly develop systems that enhance intelligent driving capabilities. This partnership aims to save costs and strengthen their position in mainland China, the world's largest automotive market.
In a filing with the Hong Kong stock exchange, Xpeng revealed the establishment of project houses in Guangzhou and Hefei. These facilities will bring together engineers from both companies to work on the development of electrical/electronic (E/E) architecture. The E/E system will connect all in-car electronic control units, sensors, and actuators, enabling advanced features such as self-driving, digital connectivity, and infotainment.
Ralf Brandsatter, VW's China CEO, expressed enthusiasm about the collaboration, stating, "With the joint development of a highly modern E/E architecture, in which both partners contribute their technological expertise, we are now taking the next step together." He emphasised that this project aligns with Volkswagen's "in China for China" strategy, focusing on Chinese customers and technological innovations.
The two companies have set a target to roll out the first car equipped with their jointly developed E/E system within the next 24 months. However, they have not disclosed which brand will be featured on these vehicles.
Volkswagen plans to equip all its VW-branded EVs in China with a "powerful and efficient" E/E architecture starting in 2026. This move is expected to enhance the performance and capabilities of their electric vehicles.
This collaboration follows VW's previous partnership with Xpeng to develop two mid-sized electric cars. The aim was to tap into the growing demand for electric vehicles in China, where 40% of new cars are now battery-powered. By teaming up with Xpeng, Volkswagen aimed to reduce development time by over 30%.
Gao Shen, an independent analyst in Shanghai, commented on the new agreement, stating, "A new agreement between the two companies to develop E/E architecture together shows that they will consolidate relations to tap the mainland's and global EV market in the future." He also noted that Volkswagen is eager to accelerate the launch of new EV models in China to keep up with local competitors.
In 2020, Volkswagen delivered 3.24 million petrol and electric cars in mainland China and Hong Kong, representing a modest 1.2% year-on-year increase in a market that grew by 5.6% overall. The company narrowly surpassed Shenzhen-based BYD, the world's top-selling EV manufacturer, which sold nearly 3 million battery-powered cars in China last year.
Volkswagen's sales of pure-electric cars in China and Hong Kong increased by 23.2% in 2023 compared to the previous year, reaching a total of 191,800 units. However, the overall EV market in China experienced significant growth, with deliveries of pure electric and plug-in hybrid cars reaching 8.9 million units, a 37% increase from the previous year.
Looking ahead, Volkswagen has ambitious plans for the Chinese market. By 2030, the company aims to launch 30 new electric car models and achieve annual sales of 4 million cars.
Volkswagen and Xpeng extend collaboration to develop intelligent driving systems
Joint development of electrical/electronic architecture to enhance EV capabilities
First car with jointly developed system to be launched within 24 months
Source: SCMP