Tuesday, June 18, 2024

Volkswagen Announces Strategic Technical Collaboration and Minority Investment in XPENG

BusinessVolkswagen Announces Strategic Technical Collaboration and Minority Investment in XPENG

XPENG Inc., a Chinese smart EV company, and the Volkswagen Group announced that XPENG and the Volkswagen Group have entered into a framework agreement on strategic technical collaboration and a share purchase agreement for strategic minority investment by the Volkswagen Group in XPENG. The objective of the strategic technical collaboration is to leverage each other’s complementary strengths and forge a long term win-win strategic partnership.

Underpinned by the vision of the strategic partnership and significant synergies, the parties simultaneously entered into a share purchase agreement for the issuance of Class A ordinary shares about 4.99% of XPENG’s outstanding share capital as of immediately after the closing to Volkswagen Group at US$15 per American depositary share, for a total consideration of approximately US$700 million. The share issuance will be subject to customary closing conditions including applicable regulatory approvals.

In connection with the strategic technical collaboration, XPENG and the Volkswagen Group will jointly develop two B-class battery electric vehicles (“BEV”) models for sale in the Chinese market under Volkswagen brand, leveraging respective core competencies and XPENG’s G9 platform and Connectivity and ADAS software. The models are expected to start production (such start of production, “SOP”) in 2026.

XPENG G9 Flagship SUV electric battery system
XPENG G9 Flagship SUV electric battery system

Furthermore, the parties will explore additional potential strategic cooperation in a number of areas, including collaboration on future EV platforms, software technologies and supply chain.

The discussion on the Strategic Technical Collaboration is ongoing and is subject to the positive outcome of a project feasibility study.

“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,” said Mr. Xiaopeng He, Chairman and CEO of XPENG.

Mr. Ralf Brandstätter, Volkswagen AG Board Member for China, commented, “Local partnerships are a key building block in the Volkswagen Group’s ‘in China for China’ strategy. Together with XPENG, we are now forming a strong cooperation and speeding up the expansion of our local electric portfolio and at the same time preparing ourselves for the next step change in innovation. In an intensely competitive and dynamic market environment we are leveraging the partners’ core competences, thus creating synergies to bring additional products to market faster – aligned with the special wishes of Chinese customers. At the same time, we can significantly optimize development and procurement costs.”

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