Shanghai (ZXZC)- Volkswagen Group (China) announced on Feb. 5 that the new Volkswagen-branded car model jointly developed with Chinese new energy vehicle maker XPENG is set to be put into production in Hefei city in 2026.

Volkswagen Anhui's MEB factory; photo credit: Volkswagen Group (China)

Volkswagen and XPENG reached an agreement in mid-2023 to jointly develop two electric models under the Volkswagen brand for the mid-sized car market in China. As part of this collaboration, Volkswagen Group would invest $700 million in XPENG and acquired a 4.99% stake in the latter.

Previously, Volkswagen announced the collaboration with XPENG in the field of new vehicle development would be led by Volkswagen China Technology Company ("VCTC") located in Hefei. Now, Volkswagen has explicitly stated that the production of the related models will also take place in Hefei, further strengthening Volkswagen's R&D  as well as production layout in the city. The significance of Anhui province and Hefei city in Volkswagen Group's global strategy is becoming more pronounced.

Volkswagen Anhui factory, and Volkswagen (Anhui) Components Co. Ltd. Thus, Hefei is rapidly becoming a crucial hub for innovation and development for Volkswagen Group in China, as well as a gathering place for critical global technological collaborations.