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German car giant Volkswagen AG has inked a strategic partnership with Chinese EV manufacturer Xpeng, with plans to develop two new electric vehicles tailored to the Chinese market. The agreement, which includes a 4.99% stake purchase in Xpeng, underscores Volkswagen's investment in China's burgeoning e-mobility industry.
Volkswagen also purchased a 4.99% stake in Xpeng as part of their deal. The former will invest around $700 million for the acquisition. This deal is a strategy to boost its business since the e-mobility market in China is growing so fast.
Under the contract, as per CNBC, Volkswagen and Xpeng will make two mid-size electric vehicles based on the platform that corresponds to the latter's G9 electric crossover sports utility vehicle. The Chinese EV maker further revealed that the two models will also use its cutting-edge driver-assist software.
Although the new EVs are set to be produced in cooperation with Volkswagen, the models will only be sold in China. The units will also bear the name of the German carmaker since the companies agreed for them to be branded as Volkswagen.
The new EVs are expected to be ready for release by the year 2026. As VW is acquiring a stake in Xpeng, it will get a seat on the local company's board of directors but is still subject to regulatory approvals.
"With the strong growth of the electric segment, there are now further market opportunities that we want to exploit," Volkswagen China's chief executive officer, Stefan Mecha, said in a press release. "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."
Xpeng's chairman and CEO, He Xiaopeng, commented, "The Volkswagen Group and XPENG each brings highly complementary strengths into this long-term strategic partnership. We are excited about the opportunity to contribute our expertise to the strategic partnership and create value for XPENG and our shareholders."
Photo by: Erik Mclean/Unsplash
