Volkswagen invest $700 million in China’s EV ‘New Force’ XPENG

The Volkswagen brand has concluded a technological framework agreement with XPENG, the dual listed China EV maker. The initial stage of the cooperation shall provide for the joint development of two Volkswagen brand electric models for the mid-size segment in the Chinese market. The China-specific vehicles will supplement the MEB product portfolio and are to be rolled out in 2026 in China. This is subject to the conclusion of final agreements.

As part of the close and long-term strategic cooperation, the Volkswagen Group is to invest approximately US$700 million in the Chinese manufacturer of intelligent electric cars. Volkswagen is thus acquiring 4.99 percent stake in XPENG at US$15 per ADS (ADS = American Depositary Share, 1 ADS represents 2 Class A Shares) by way of a capital increase, and will hold a seat as an observer on the XPENG board of directors. The share issuance will be subject to customary closing conditions including applicable regulatory approvals.

Ralf Brandstätter, Volkswagen AG Board Member for China, commented: “Local partnerships are an important building block in the Volkswagen Group’s ‘in China for China’ strategy. We are now accelerating the expansion of our local electric portfolio and at the same time preparing for the next innovation step. With XPENG, we now have another strong partner that is one of the leading manufacturers in China in key technology areas.In a competitive and dynamic market environment, we are leveraging the strengths of Volkswagen and our partners to create synergies to bring additional products to market faster. In doing so, we focus on the specific needs of our customers in China. At the same time, we want to significantly optimize development and procurement costs.”

He Xiaopeng, Chairman and CEO of XPENG, said“The Volkswagen Group and XPENG each brings in highly complementary strengths into this long-term strategic partnership. We will share Smart EV technologies and world-class design and engineering capability with each other and learn from each other. Since the founding of XPENG, we have been developing full-stack technologies from EV platform to connectivity and ADAS software in house. We are excited about the opportunity to contribute our expertise to the strategic partnership and create value for XPENG and our shareholders.”

Stefan Mecha, CEO VW Brand Region China, said “The VW brand has a long-term electrification-strategy for the Chinese market. In doing so, we continue to consistently rely on our high-performance MEB and SSP architectures. With the strong growth of the electric segment, there are now further market opportunities that we want to exploit. We are also focusing on joint development projects with strong local partners in order to rapidly expand our product portfolio. Together with XPENG, we aim to put two additional fully connected electric vehicles on the road from early 2026 onwards, thus opening up new customer groups for the VW brand.”