Volkswagen and Xpeng have agreed to develop EVs together

Volkswagen and Xpeng have agreed to develop two electric vehicles together, which will hit the market in two years, the companies announced today.

The EVs built by VW and Xpeng will wear the German automaker’s badge, likely due to brand recognition. Both cars developed through the joint partnership will be mid-sized SUVs and will be exclusively available in the popular and competitive market in mainland China.

Volkswagen invested $700 million in Xpeng, obtaining a 4.99 percent stake in the Chinese automaker last year.

The move was made by Volkswagen after the company struggled to break through in markets outside of Europe. China is a highly competitive market for electric vehicles, and the United States, while not as concentrated with EVs, is slowly moving toward more ownership levels with every passing year.

However, Volkswagen does not have the time to continue attempting to develop vehicles without the help of other companies, especially for other markets. Last year, its market share in China dropped, so it is leaning on domestic car companies to assist in developing competitive EVs.

Volkswagen aims to strengthen its position in China

“In the world’s largest and fastest-growing EV market, speed is fundamental when it comes to tapping into promising market segments,” Ralf Brandsatter of VW China said. “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.”

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