- Major milestone reached: Partners enter into Master Agreement on strategic technical collaboration,bundling their respective strengths to tackle the dynamic Chinese market
- Joint development of intelligent connected vehicles (ICV) will complement the Volkswagen brandportfolio with two models in the mid-size segment for the Chinese market
- Partnership strengthens Volkswagen Group’s ‘In China, for China’ approach to efficiently cater to theneeds of Chinese customers and tap new market segments
- Timeline approved: first two models shall hit the road in 2026 – collaboration in developmentsignificantly reduces time to market by more than 30 percent
- Joint Sourcing Program to optimize cost structures for both parties
The agreement also paves the way for an extended and deeper strategic collaboration in the future. As part of the Master Agreement, both parties have entered into a joint sourcing program for common vehicle and platform parts used by both partners. Through this initiative and by leveraging Volkswagen Group's supply chain, the program is meant to provide cost advantages and shall further improve the economic competitiveness of the jointly developed mid-size ICVs.
At the same time, joint purchasing activities and the use of innovative technologies in the design and engineering phase will significantly reduce development time by more than 30 percent. The Volkswagen China Technology Company (VCTC) in Hefei is acting as a central interface to ensure the best possible synergies.
Ralf Brandstätter, Board Member of Volkswagen AG for China, said: “In the world's largest and fastestgrowing EV market, speed is fundamental when it comes to tapping into promising market segments. To constantly increase our local portfolio, we are expanding our own development capacities in China. Thereby, consistently following our strong ’In China, for China’ approach which focuses on the specific needs of the Chinese customers. Through the partnership with XPENG, we are not only accelerating development times, but also boosting efficiency and optimizing cost structures. This increases the economic competitiveness in a highly price sensitive market environment significantly.”
Brandstätter added: “The rapid finalisation of the Master Agreement after the strategic partnership announcement last year already shows the great potential of this collaboration. 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.”
Xiaopeng He, Chairman and CEO of XPENG, said: “The signing of the Master Agreement represents another significant milestone achieved together with our partner Volkswagen Group. There is no precedent of the strategic partnership between Volkswagen and XPENG. However, 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. 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.”
Stefan Mecha, CEO of the VW brand in China, said: “The Volkswagen brand is continuously expanding its range of electric cars for Chinese customers. Through the partnership with XPENG, we are gaining further momentum. Both partners contribute their respective strengths to the joint development, which enables us
to supplement our existing portfolio quickly and efficiently with two China-specific vehicles – starting with a SUV. In a highly competitive environment, this is of crucial importance. My compliments to both teams. Both cars will be on the road as early as 2026 We have a strong plan in place to further develop the promising and steadily growing mid-size segment for the Volkswagen brand. This is an important milestone in the ’In China, for China’ approach and a clear commitment to our Chinese customers.”
Partnership is an important step in the Group’s ’In China, for China’ strategy
The cooperation ties in with the Group’s ’In China, for China’ strategy to address new trends in China at anearly stage and leverage the growth dynamics and innovative strength of the market more effectively. Inorder to speed up decision-making and development processes in the region, Volkswagen is strengthening itslocal capacities for e-mobility as well as digitalization and autonomous driving.
To drive this strategy, Volkswagen expanded its Hefei site in east China’s Anhui Province into a state-of-theartproduction, development, and innovation hub – with the Volkswagen Group China Technology Companyfor fully connected, intelligent electric vehicles in its centre.
At the same time, the Volkswagen Group is also focusing on partnerships with local high-tech companies. ForVolkswagen Group China, high technology localization and systematic customer orientation are the key totake on a leading role in the new ICV era.
