Volkswagen Throws the Towel, Buys 5% Stake in XPeng To Co-Develop New Electric Vehicles

XPeng G9 8 photos
Photo: XPeng
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To say that Volkswagen's EV program is not going very well would be an understatement. The German carmaker is trying to energize EV development with the help of Chinese companies. After Audi announced a partnership with SAIC, Volkswagen bought a 5% stake in EV startup XPeng with plans to build at least two EV models using its G9 platform.
After Oliver Blume took the helm of the Volkswagen Group in September 2022, all previously announced plans were put on hold. The EV program, which his predecessor Herbert Diess tried to fast-track, suffered the most. Several projects, including a new EV factory, were scrapped, while others were delayed. As Volkswagen was already behind its peers in EV development, this led to unwanted consequences.

The volume brands (Volkswagen, Skoda, SEAT) and even Audi (for the Q4 e-tron) were left with an aging EV platform (MEB), unable to compete with more modern rivals. Porsche and Audi are still working on launching the Macan EV, Q6 e-tron, and A6 e-tron, all sharing the Premium Platform Electric (PPE) architecture which should've been in production already. At the same time, the Artemis project, Volkswagen Group's ambitious autonomous vehicle program, has been pushed back toward the end of the decade.

In this context, individual brands inside the Volkswagen Group started defecting and pursuing their own plans. Last month, Porsche established its own software division at Nardo Technical Center in Italy for advanced software-defined-vehicle development. Earlier this month, Audi announced a partnership with SAIC to use its EV architecture for vehicles destined for the Chinese market. Now, the Volkswagen brand is doing something similar with a different partner, showing that chaos reigns supreme at Volkswagen Group headquarters, where it's everyone for themselves.

Instead of going with an established carmaker as Audi did, Volkswagen chose EV startup XPeng as a partner. The German carmaker invested $700 million via a capital increase, with the intention to own about 4.99% of the Chinese EV maker. Volkswagen will also hold a seat as an observer on the XPeng board of directors.

Volkswagen will develop two new electric mid-size SUVs to complement its MEB-based lineup in China. According to Chinese media, which cites XPeng sources, both models will use XPeng G9's platform, connectivity package, and ADAS software. The new models will reach the market in 2026. Volkswagen and XPeng will work together on software development and supply chain for the new models.

The cooperation also involves jointly developing future e-platforms through the recently founded Volkswagen Group (China) Technology Company (VCTC), which will work together with XPeng. The new development center is the largest outside Wolfsburg, with more than 2,000 experts expected to work there on new EV technologies.

Volkswagen and Audi are only the first German brands to start EV partnerships in China. Rumor has it that Mercedes-Benz is next, courting another EV startup, NIO. A picture widely shared on social media since May shows Mercedes-Benz CEO Ola Kaellenius meeting with NIO's founder, chairman, and CEO William Li at a NIO House.

There is no official confirmation about the talks the two companies might have had, and some even say the picture was fake. Still, we wouldn't be surprised to see more partnerships between German and Chinese companies announced shortly. After all, the Germans are seriously outgunned when it comes to EV development.
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About the author: Cristian Agatie
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After his childhood dream of becoming a "tractor operator" didn't pan out, Cristian turned to journalism, first in print and later moving to online media. His top interests are electric vehicles and new energy solutions.
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