Volkswagen Group has expanded its partnership with Chinese electric vehicle (EV) manufacturer Xpeng. The two companies have signed an agreement to develop systems that enhance intelligent driving capabilities.
The two automakers also pledged to strengthen their partnership and develop new models as they look to cut costs as competition intensifies in mainland China, the world’s largest auto market.
Xpeng announced in a Hong Kong Stock Exchange filing Monday the establishment of project houses in Guangzhou, where Xpeng is headquartered, and Hefei, capital of East China’s Anhui province. They will house engineers from both companies to work together on the development of electrical/electronic (E/E) architecture.
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An E/E system connects all the electronic control units (ECUs), sensors and actuators in the vehicle to support a smart vehicle’s capabilities in the areas of self-driving, digital connectivity and infotainment.
“With the joint development of a state-of-the-art E/E architecture, in which both partners contribute their technological expertise, we are now taking the next step together,” said Ralf Brandsatter, CEO of VW China. “For us at Volkswagen, this project is also the next milestone in the consistent implementation of our ‘in China for China’ strategy, with a clear focus on Chinese customers and technological innovations.”
An undated selfie of Xpeng co-founder and chairman He Xiaopeng and Volkswagen’s Chinese CEO Ralf Brandstatter. The two companies signed an agreement to develop systems that enhance intelligent driving. Photo: LinkedIn alt=An undated selfie of Xpeng co-founder and chairman He Xiaopeng and Volkswagen’s Chinese CEO Ralf Brandstatter. The two companies signed an agreement to develop systems that enhance intelligent driving. Photo: LinkedIn>
The two companies said the first car with the jointly developed E/E system would roll off the assembly line within 24 months. However, they did not say what logo would be painted on the vehicles.
All VW brand electric vehicles in China from 2026 will be equipped with a “powerful and efficient” E/E architecture developed through the partnership, Brandsatter said.
In April, VW signed a deal with Xpeng to develop two mid-size electric cars, as the company aims to accelerate electrification on mainland roads, where 40 percent of new cars are battery-powered.
The German company, the mainland’s largest automaker, said the partnership with Xpeng would cut development time by more than 30 percent.
The deal came after VW last year completed a $700 million investment to acquire a 4.99 percent stake in Xpeng, an electric vehicle maker known for its autonomous driving technology bravery.
“A new agreement between the two companies to jointly develop E/E architecture shows that they will consolidate relations to tap into the EV market in the mainland and globally in the future,” said Gao Shen, an independent analyst in Shanghai. “At this point, VW is keen to accelerate the launch of new EV models in China to catch up with local rivals.”
VW delivered 3.24 million gasoline and electric cars to the mainland and Hong Kong last year, a relatively weak 1.2 percent year-on-year increase in a market that grew 5.6 percent overall.
The company narrowly defeated BYD located in Shenzhenthe world’s best-selling EV maker, which delivered nearly 3 million battery-powered cars to Chinese buyers last year.
VW sold 23.2 percent more all-electric cars in the mainland and Hong Kong in 2023 than in 2022, totaling just 191,800. Meanwhile, the mainland EV market surged 37 percent last year, with deliveries of all-electric and plug-in hybrid cars reaching 8.9 million units.
In April, Brandsatter said VW planned to launch 30 new electric car models on the mainland by 2030, targeting annual sales of 4 million cars.
This article originally appeared in the South China Morning Post (SCMP)the most authoritative voice covering China and Asia for over a century. For more SCMP stories, explore the SCMP app or visit the SCMP’s Facebook And Twitter pages. Copyright © 2024 South China Morning Post Publishers Ltd. All rights reserved.
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