Sunday, February 16, 2025
BusinessVolkswagen Strengthens Partnership with Xpeng to Boost EV Development in China

Volkswagen Strengthens Partnership with Xpeng to Boost EV Development in China

Volkswagen Group has announced an extension of its collaboration with Chinese electric vehicle (EV) manufacturer Xpeng. The two companies have signed an agreement to jointly develop advanced systems aimed at enhancing intelligent driving capabilities. This move is part of a broader strategy to stay competitive in mainland China, the world’s largest automotive market.

As part of the agreement, Volkswagen and Xpeng will establish project houses in Guangzhou and Hefei, where engineers from both firms will collaborate on developing a state-of-the-art electrical/electronic (E/E) architecture. This E/E system is crucial as it integrates all in-car electronic control units (ECUs), sensors, and actuators, supporting smart vehicle functionalities such as self-driving, digital connectivity, and infotainment.

Ralf Brandstätter, CEO of Volkswagen China, emphasized the significance of this partnership, stating, “With the joint development of a highly modern E/E architecture, in which both partners contribute their technological expertise, we are now taking the next step together. For us at Volkswagen, this project is also the next milestone in the consistent implementation of our ‘in China for China’ strategy, with a clear focus on Chinese customers and technological innovations.”

The collaboration is set to yield its first vehicle equipped with the jointly developed E/E system within 24 months. All Volkswagen-branded EVs in China will feature this advanced architecture starting in 2026, aiming to offer powerful and efficient solutions to consumers.

This agreement builds on a previous pact signed in April, where Volkswagen and Xpeng committed to developing two mid-sized electric cars. This partnership is expected to accelerate Volkswagen’s electrification efforts in China, where battery-powered vehicles now account for 40% of new car sales.

Volkswagen’s commitment to this partnership was further solidified by a $700 million investment last year, securing a 4.99% stake in Xpeng. This move underscores Volkswagen’s strategy to reduce development time and leverage Xpeng’s expertise in autonomous driving technology.

Industry analysts, such as Gao Shen from Shanghai, view this collaboration as a strategic effort by Volkswagen to consolidate its presence in both the Chinese and global EV markets. The urgency is clear, as VW seeks to launch new EV models more rapidly to keep pace with local competitors.

Last year, Volkswagen delivered 3.24 million petrol and electric cars in China and Hong Kong, a modest 1.2% increase compared to the overall market growth of 5.6%. Despite this, Volkswagen saw a 23.2% increase in pure-electric car sales, totaling 191,800 units. However, the broader EV market in China grew by 37%, with 8.9 million pure electric and plug-in hybrid cars delivered.

Looking ahead, Brandstätter outlined Volkswagen’s ambitious plans to launch 30 new electric models in China by 2030, targeting annual sales of 4 million cars. This expansion aims to reinforce Volkswagen’s position against fierce competition, particularly from Shenzhen-based BYD, the world’s top-selling EV manufacturer.

The extended partnership with Xpeng represents a significant step for Volkswagen as it intensifies its focus on innovation and customer-centric solutions in the rapidly evolving Chinese automotive landscape.

Press Roomhttps://autotech.news/
AutoTech News features articles from the intersection of the automotive and the technology industry focusing on the four decisive mega-trends: automated/self-driving, electrification, connectivity and sharing.