Xpeng gets Volkswagen’s US$700 million investment to jointly develop EVs in China, the world’s largest vehicle market

The German carmaker would invest about US$700 million for 4.99 per cent of Xpeng, according to a LinkedIn post by Volkswagen’s China chief executive Ralf Brandsatter

The two companies plan to roll out two Volkswagen-badged midsize EVs in 2026 in China, according to their technological framework agreement

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Xpeng’s booth during the 20th Shanghai International Automobile Industry Exhibition in Shanghai on April 19, 2023. Photo: AFP

Published: 9:35am, 27 Jul 2023Updated: 4:39pm, 27 Jul 2023

Volkswagen Group said it would invest in one of China’s fastest-growing electric-car (EV) makers to jointly develop automobiles powered by non-fossil fuels, expanding its footprint in the world’s largest market for such vehicles.

The German carmaker would invest about US$700 million for 4.99 per cent of Xpeng and an observer’s board seat in the Chinese carmaker, according to a LinkedIn post by Volkswagen’s China chief executive Ralf Brandsatter. The two companies plan to roll out two Volkswagen-badged midsize EVs in 2026 in China, according to their technological framework agreement.

“This allows Volkswagen Group to expand its position in China, by tapping new customer segments and bringing new intelligent, fully connected electric vehicles (ICV) to the market more quickly,” Brandstatter said in his LinkedIn post. “The reason we are doing this is clear. Already, more than 30 per cent of newly registered vehicles in China are electrified. The tipping point is expected in 2025, when that figure will reach 50 per cent. We will seize this huge market growth potential.”

He added that two new electric car models, which will target China’s middle-class segment, will be jointly developed for VW after the deals with Xpeng are signed.

An undated selfie of Xpeng’s co-founder and chairman He Xiaopeng and Volkswagen’s China chief executive Ralf Brandstatter. Photo: LinkedIn

The German marque, the top car brand in terms of overall sales on the mainland, has been lagging Tesla and BYD in developing electric cars in China.

Over the past three years, VW has established partnerships with artificial intelligence chip designer Horizon Robotics, battery producer Gotion High-tech, and intelligent car operating system products provider Thundersoft in China to strengthen its EV development capabilities, hoping to churn out new models that can hit a consumer nerve.

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