VW Companions with XPENG & Audi Companions with SAIC in China

Giving a giant enhance to Chinese language good EV startup XPENG, and likewise in fact getting one thing for itself, Volkswagen Group introduced right this moment that it’s investing roughly $700 million (USD) into XPENG, offering a capital enhance, and in trade getting 4.99% of the corporate’s shares at US$15 per ADS. The partnership additionally includes “joint growth of clever, totally related electrical automobiles (ICV) for the Chinese language market.”

Audi is forming an identical partnership with Chinese language automaker SAIC — not the funding half, however the “joint growth of clever, totally related electrical automobiles (ICV) for the Chinese language market” half. The brand new fashions will complement relatively than exchange present fashions, and are a part of Volkswagen Group’s “in China for China” technique to achieve extra Chinese language prospects. “The intention is to swiftly faucet into new buyer and market segments, thereby systematically leveraging the potential of China’s dynamically rising e-mobility market.”

Volkswagen + XPENG — Match Made In Heaven?

Concerning the Volkswagen–XPENG partnership, the preliminary plan so far as new fashions go is that they’ll collectively develop two new Volkswagen-brand EVs. These will probably be within the midsize section. (Although, it’s not clear if which means midsize sedans, crossovers/SUVs, or each.) Dare I say — these Volkswagen EV fashions can have significantly better tech than any earlier Volkswagen EVs. This looks like a way more dependable, faster, simpler route than counting on the corporate’s inner arm Cariad to leap ahead in good software program (and {hardware}). For a style of what this partnership may convey to the desk for Volkswagen, see: “XPeng G6 — Depraved New Electrical, Clever SUV For $29,000.” Additionally, simply on the self-driving or driver-assist entrance, I believe XPENG has the very best tech suite on the auto market (worldwide) on this class. It’s not clear if Volkswagen will faucet into that, however I’d suggest that it accomplish that.

One concern I had was that it might take a very long time for this partnership to bear fruit, however the first automotive produced by the partnership is meant to hit the market in 2026 — that’s not too distant. (2025 can be even higher, however is unquestionably unrealistic. The ultimate agreements between the businesses are usually not even signed, so there’s nonetheless a lot work forward to design, develop, and manufacture vehicles.)

The 4.99% share of XPENG that Volkswagen Group is getting is an attention-grabbing portion of the information. If I’m not mistaken, having 5% or extra share would grant extra rights and affect. As it’s, although, Volkswagen Group “will maintain a seat as an observer on the XPENG board of administrators.” I don’t recall seeing one other such association — usually it’s board seat or no board seat, “an observer on the board.” Although, one has to presume that if the partnership goes properly, the businesses may develop it and Volkswagen may get an actual seat on the board. We will see.

Naturally, the large advantages for XPENG are 1) extra funding and a couple of) extra avenues for manufacturing and promoting good electrical automobiles and ultimately making a revenue. Truly, the expectation is that this partnership will assist each XPENG and Volkswagen Group on the prices and earnings entrance.

So far as logistical specifics, we now have some extra information from thee German auto large: “The just lately based Volkswagen Group China Know-how Firm (VCTC) is the event associate for XPENG. The brand new growth, innovation and procurement middle is the Group’s largest growth location outdoors Wolfsburg. Going ahead, that is the place over 2,000 growth and procurement specialists will work on new clever, totally related electrical automobiles.” That sounds promising.

“Native partnerships are an necessary constructing block within the Volkswagen Group’s ‘in China for China’ technique. We at the moment are accelerating the growth of our native electrical portfolio and on the identical time making ready for the subsequent innovation step,” Ralf Brandstätter, Volkswagen AG Board Member for China, commented. “With XPENG, we now have one other sturdy associate that is among the main producers in China in key know-how areas.In a aggressive and dynamic market surroundings, we’re leveraging the strengths of Volkswagen and our companions to create synergies to convey further merchandise to market quicker. In doing so, we concentrate on the precise wants of our prospects in China. On the identical time, we need to considerably optimize growth and procurement prices.”

Audi + SAIC

The Audi plus SAIC information is extra of an replace since they have already got an present partnership. This simply expands it. “Audi has signed a strategic memorandum with its Chinese language three way partnership associate SAIC to additional develop present cooperation. Joint growth actions are to increase the portfolio of totally related electrical automobiles on supply within the premium section swiftly and effectively. It’s deliberate to start out with electrical fashions in a section the place Audi doesn’t as but have a presence in China.

“The collectively developed e-models are to be outfitted with state-of-the-art software program and {hardware}, with a view to supply Chinese language prospects an intuitive, related digital expertise. All events are contributing their respective core competences to the event effort.

“Each agreements additionally envisage a deliberate, future joint growth of recent native platforms for the subsequent technology of clever, totally related automobiles (ICV).”

China — The Crown Jewel of Auto Markets

Succeeding within the greatest auto market on the planet, and the most important EV market on the planet by far, isn’t as straightforward because it was once for Western auto firms. It was once that Chinese language consumers would gobble up the vehicles from these high-prestige overseas firms. Nevertheless, the Chinese language auto market has matured quickly and impressively. Chinese language auto firms have been enjoying leapfrog in some methods, together with in relation to electrical automobile evolution and good know-how. Chinese language auto firms dominate the Chinese language EV market. Check out the highest promoting plugin automobiles in China within the first 5 months of 2023:

Each a kind of fashions comes from a Chinese language automaker besides the Tesla Mannequin Y and Tesla Mannequin 3 — and a few folks take into account Tesla half Chinese language, however it’s a properly established exception both means. The message is obvious: Need to promote electrical vehicles in China? They higher be Chinese language. How a lot the brand new partnerships assist Volkswagen and Audi is but to be seen — they’ll nonetheless be promoting underneath their (non-Chinese language) manufacturers, however maybe they’ll get fame boosts, and maybe they’ll supply vehicles which might be extra interesting to Chinese language consumers.

“The cooperations tie in with the Group’s ‘in China for China’ technique to deal with market-defining developments in China at an early stage and leverage the expansion dynamics and modern energy of the Chinese language market extra successfully. So as to velocity up decision-making and growth processes within the area, Volkswagen is strengthening its native capacities for e-mobility in addition to digitalization and autonomous driving,” the corporate writes.

We’ll see how this goes. I, for one, am bullish in regards to the plan and suppose it’s the very best I’ve seen from Volkswagen in China, and that it additionally provides a giant enhance to XPENG.

Featured picture: XPeng G9, courtesy of XPeng.


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