VW and Xpeng finalize framework agreement

VW and Xpeng have concluded a framework agreement on their cooperation in the development of electric cars. A step that had become apparent after the basic agreement last summer. There are also initial details on the planned electric cars for the Chinese market.

Image: Volkswagen

In addition to joint development, the framework agreement also provides for a procurement program for jointly used vehicle and platform components in order to reduce costs. However, the initial focus is on the joint development of two VW brand mid-range models, which are to be launched on the Chinese market in 2026. This has been known since June 2023.

The first model will be an SUV, as the two companies confirmed in their announcements. VW has also published a first teaser image of the vehicle, which does not reveal too much yet – but also does not appear to have the typical front of the ID. models. “This will enable the VW brand to expand its existing portfolio quickly, to reach new target customer groups in the fast-growing EV market in China. The two jointly developed e-models will be equipped with state-of-the-art software and hardware, offering Chinese customers an intuitive, connected digital experience and advanced automated driving functions,” the vehicle is further described. However, no initial specific technical data is mentioned.

“Foundation for strategic cooperation”

Instead, the objectives of the cooperation already stated last year are repeated: product development cycles are to be shortened by “more than 30 per cent” through joint procurement and the “use of innovative technologies in the vehicle design and engineering phase”. The cooperation will be based at the new Volkswagen (China) Technology Co., Ltd (VCTC) in Hefei.

According to VW, the development cooperation for the two mid-range models does not have to stop there: “The agreement also paves the way for an extended and deeper strategic collaboration in the future,” says the German group. Although this also alludes to the joint procurement program, further cooperation for other model series could also follow. There is also another connection between the two companies: VW also became an investor in Xpeng in December 2023.

Under the China Board Member Ralf Brandstätter, VW has adopted an “In China, for China” strategy. This strategy aims to identify the key trends in the Chinese market at an early stage of product development and then “leverage the growth dynamics and innovative strength of the market more effectively”. This is to be achieved on the one hand through the new VCTC in Hefei as a development hub for a wide range of tasks and brands, but also through cooperation. The VW Group is actively examining cooperation with local high-tech companies in China, it is said.

“The rapid finalisation of the Master Agreement after the strategic partnership announcement last year already shows the great potential of this collaboration,” says Brandstätter.” The two teams are working closely together with a clear goal: to combine the strengths of both parties to bring smart products onto the road for our customers.”

“[…] the commitment by both companies and the trust built between our R&D teams over the past eight months have made the success of our project possible,” says Xpeng founder and CEO He Xiaopeng. “Combining Volkswagen’s highly reputable vehicle development and engineering capability with XPENG’s smart EV technologies, we will deliver the best smart EV products to Chinese consumers. With the long-term vision of our strategic partnership, both parties contribute their best to the partnership. We have started to realize synergies through our Joint Sourcing Program. I firmly believe there is a lot of upside potential to this partnership that we can explore.”



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