A week after confirming its subsidiary Audi will be co-developing EVs with SAIC Motor, Volkswagen Group is investing hundreds of millions of dollars in China’s XPeng Motors. Together, the automakers plan to jointly develop Volkswagen branded EVs for the Chinese market.

The collaborations between legacy European automakers and young Chinese EV manufacturers continue to grow, especially this month. First, we covered rumors that Audi had been kicking the tires in China, so to speak, in search of a new partner to provide a next-generation EV platform.

Two days later, anonymous sources were confirming Audi was in “advanced talks” SAIC Motor – a Chinese state-owned manufacturer alongside word that a public announcement was coming. Last week, SAIC Motor came forward and confirmed the partnership which was later acknowledged by Audi in the following statement shared with Electrek:

SAIC and Audi share the common understanding to accelerate the electrification of the model portfolio through joint projects. All stakeholders agree that the Chinese auto market is in the midst of the biggest transformation in its history, therefore we will jointly work on a strategic approach that guarantees our future success.

A big reason for Audi’s expedited search overseas for a new dance partner is lagging sales due to development delays, particularly on the software side. Parent Volkswagen Group and its incoming new CEO is supposed to provide Audi with its next EV platform, but has its own list of development headaches in which it might not be able to deliver architecture until 2029.

As a result, Volkswagen Group looks to supplement its current MEB platform in China with a new partner – XPeng Motors.

XPeng’s new G6 SUV / Credit: XPeng Motors

Volkswagen invests $700M for 5% stake in XPeng

According to Volkswagen Group, it is bolstering its position on electrification in China on the wings of collaborations between Audi and SAIC as well as today’s news of a “long-term cooperation” with XPeng Motors via a newly formed entity called Volkswagen China Technology Company (VCTC). The cooperations join VW’s existing joint venture with FAW founded over 30 years ago.

In terms of its new relationship with XPeng specifically, Volkswagen is investing $700 million via capital increase with the intention to eventually hold approximately 4.99% of shares in the Chinese EV automaker.

The first step of the collaboration includes the joint development of two VW branded BEVs for the mid-size segment in China, sitting atop XPeng’s G9 platform equipped with some of the industry’s best ADAS software. Volkswagen Group board member for China Ralf Brandstätter spoke to the German automaker’s bolstered strategy in China:

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.

Volkswagen says its Chinese-specific EVs designed alongside XPeng Motors will roll out in 2026. The automaker also says that its cooperation with XPeng as well as SAIC Motor include plans for “future e-platforms,” but are subject to further negotiations.

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