On July 26th, Volkswagen Group announced two collaborations with Chinese automakers in the field of electric vehicles in China. Specifically, Volkswagen’s brand will enter into a technology cooperation framework agreement with Xiaopeng Motors. As part of this agreement, Volkswagen Group will invest approximately 700 million USD in Xiaopeng Motors, acquiring about 4.99% of the company’s shares at a price of 15 USD per share upon completion of the transaction. Additionally, Audi and SAIC Group signed a memorandum of understanding to deepen their existing cooperation. Both collaborations aim to jointly develop electric intelligent connected vehicles (ICV) exclusively for the Chinese market.
Key points of this collaboration are as follows:
- Volkswagen’s brand and Xiaopeng Motors have reached a technology cooperation framework agreement. Volkswagen Group will invest around 700 million USD in Xiaopeng Motors, acquiring about 4.99% of the company’s shares.
- Volkswagen and Xiaopeng will target the mid-size electric vehicle market and jointly develop two vehicle models based on the MEB platform.
- Audi and SAIC Group signed a memorandum of understanding to deepen their existing cooperation and introduce new Audi models in currently untapped markets in China.
- The new models will complement the existing product portfolio while tapping into various segments and customer groups in the rapidly growing Chinese electric mobility market.
- This strategic cooperation is a part of Volkswagen Group’s “In China, For China” strategy, aimed at enhancing the group’s local research and development capabilities to better meet Chinese customers’ needs.
Volkswagen’s brand and Xiaopeng Motors have reached a technology framework agreement. In the initial stage of the collaboration, both parties plan to jointly develop two electric vehicle models for the mid-size car market in China under the Volkswagen brand. These two new vehicles exclusively for the Chinese market will complement the product lineup based on the MEB platform and are scheduled to enter the market in 2026.
The specific details of the collaboration are subject to the final agreement. As part of this close and long-term strategic collaboration, Volkswagen Group will invest approximately 700 million USD in Xiaopeng Motors, acquiring about 4.99% of the company’s shares at a price of 15 USD per American Depositary Share (ADS). Upon completion of the transaction, Volkswagen Group will have an observer seat on Xiaopeng Motors’ board of directors. The share issuance is subject to customary closing conditions, including relevant regulatory approvals.
Audi and its Chinese joint venture partner, SAIC Group, signed a strategic memorandum of understanding to further deepen their existing cooperation. Both parties will rapidly and efficiently expand the portfolio of high-end intelligent connected electric vehicle products in the market through joint development. As the first step in the plan, Audi will enter market segments that were previously not covered in China by introducing new electric vehicle models.
The jointly developed electric vehicle models will be equipped with state-of-the-art software and hardware, providing intuitive and connected digital experiences for Chinese customers. Each party will contribute its core capabilities during the development process.
Additionally, both agreements envision the joint development of a new localized platform for the next generation of intelligent connected vehicles (ICV). The partnership aims to rapidly expand the group’s product range and create more “In China, For China” models, catering to a large potential customer base and diverse market segments. Further details of the future electric vehicle platform collaboration will be negotiated among the partners.
Bernd Leissner, Managing Director of Volkswagen Group China, stated, “Cooperation with local partners is a cornerstone of our ‘In China, For China’ strategy. We are accelerating the expansion of our local electric vehicle product portfolio while preparing for the next wave of innovation. Joining forces with Xiaopeng Motors gives us another strong partner in crucial areas of technology in China’s competitive and dynamic market environment. By combining the core competencies of our partners, we will create synergies to bring new products tailored to the unique needs of Chinese customers to the market faster, optimizing the development and procurement costs for all parties involved.”
Volkswagen Automotive Technology (China) Co., Ltd. (VCTC) will be responsible for the development of new Volkswagen brand models.
The recently established Volkswagen Automotive Technology (China) Co., Ltd. (VCTC) will become Xiaopeng Motors’ partner in the field of development. This technology company brings together research and development, innovation, and procurement functions and is the largest R&D base of the Volkswagen Group outside of Wolfsburg. In the future, more than 2,000 R&D and procurement experts will be working on related projects for new intelligent connected electric vehicle models. Compared to current model projects, the collaboration between the two parties will realize significant synergy potential and cost advantages through joint development and procurement.
This partnership represents a significant step forward in implementing Volkswagen Group’s “In China, For China” strategy. Based on this strategy, Volkswagen Group aims to seize decisive trends in the Chinese market at the early stage of product development and more efficiently leverage the growth momentum and innovation capabilities of the Chinese market. To accelerate decision-making and development processes in China, the Volkswagen Group is strengthening its local research and development capabilities in the fields of electric mobility, digitalization, and autonomous driving.
In line with this, Volkswagen Group has established a highly modern production, research and development, and innovation base in Hefei, Anhui Province. Volkswagen Anhui will start production later this year. In addition, Volkswagen (Anhui) Power Battery Co., Ltd. is building a high-voltage battery system manufacturing plant in Hefei. Volkswagen Automotive Technology (China) Co., Ltd. has also established a research and procurement center for intelligent connected electric vehicles in Hefei.
Furthermore, Volkswagen Group is focusing on collaborations with high-tech companies in China. For Volkswagen Group (China), localized high-tech research and development and a customer-centric approach are key to playing a leading role in the new era of intelligent connected vehicles (ICV).
He Xiaopeng, Chairman, and CEO of Xiaopeng Motors, said, “Volkswagen Group and Xiaopeng Motors complement each other’s strengths, forming the foundation for long-term strategic cooperation. We will share technologies for intelligent electric vehicles and world-class design and engineering capabilities, learning from each other. Since the establishment of Xiaopeng Motors, we have been committed to full-stack self-developed electric vehicle platforms, as well as vehicle-to-vehicle communication and autonomous driving software. I am delighted to contribute our technological expertise to the strategic cooperation and create value for Xiaopeng Motors and our shareholders.”
Meng Xie, CEO of the Volkswagen Passenger Cars brand in China, stated, “The Volkswagen brand has been advancing its electrification strategy in the Chinese market for the long term. Throughout this process, we will continue to rely on the strong performance of the MEB and SSP platforms. With the strong growth of the electric vehicle market, we hope to explore more market opportunities. At the same time, we will focus on joint development projects with strong local partners to rapidly expand our product portfolio. Our goal is to launch two new intelligent connected vehicle models together with Xiaopeng Motors starting in 2026 and explore new customer segments for the Volkswagen brand.”
Zu Sijie, Vice President and Chief Engineer of SAIC Group, stated, “We have signed a memorandum of understanding with Audi. Leveraging the strengths of both sides, we will accelerate the development of a new electric vehicle model for SAIC Audi to meet the demands of Chinese customers for high-end intelligent.
