Thursday, April 25, 2024
NewsVolkswagen and XPeng Forge Ahead with Joint Electric SUV Venture

Volkswagen and XPeng Forge Ahead with Joint Electric SUV Venture

Collaboration Aims to Leverage Synergies in Design, Engineering, and Sourcing to Expedite Development and Cut Costs


Volkswagen Group and its Chinese electric vehicle (EV) counterpart, XPeng, have announced the co-development of a new SUV. This venture is a strategic alignment designed to harness the strengths of both automotive giants. The partnership, which was formalized in July with Volkswagen’s acquisition of a 4.99% stake in XPeng for approximately $700 million. This is the second such partnership that involves Volkswagen as they’ve recently initiate partnership talks with Renault for EVs as well.

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The two companies have agreed to a “master agreement” focusing on platform and software collaboration. This pact includes a joint sourcing program aimed at reducing costs by leveraging the economies of scale. The parts for the upcoming SUV will be sourced jointly. Volkswagen’s expertise in design and engineering, combined with XPeng’s technological prowess, particularly its Edward platform technology used in the G9 model, is expected to reduce the development time of the new vehicle by over 30%.

 

This collaboration comes at a time when Volkswagen is looking to recapture market share in China, a market that has seen the German automaker lose ground to local manufacturers like BYD. The partnership with XPeng is viewed as a strategic move to regain a foothold in the world’s largest and fastest-growing EV market. According to Ralf Brandstatter, a board member of VW Group and the China chief, speed is of the essence in this competitive landscape.

2024 Xpeng G9 | Photo: Xpeng

The new SUV will bear the Volkswagen logo, according to Automotive News Europe, but will be built on a platform jointly developed by the two companies. This move is part of Volkswagen’s broader strategy to adapt to the shifting dynamics of the Chinese automotive market, which includes a pivot towards EVs and a greater reliance on local components to drive down costs.

 

Despite a dip in China’s NEV sales in January, the first month-on-month decline since August, both Volkswagen and XPeng are pressing forward with their plans. XPeng, in particular, is doubling down on its commitment to innovation by announcing plans to expand its workforce by 4,000 and to invest significantly in artificial intelligence.

 

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Matt St-Pierre
Matt St-Pierre
Trained as an Automotive Technician, Matt has two decades of automotive journalism under his belt. He’s done TV, radio, print and this thing called the internet. He’s an avid collector of many 4-wheeled things, all of them under 1,500 kg, holds a recently expired racing license and is a father of two. Life is beautiful. Send Matt an emai

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