Shanghai (ZXZC)- On February 28, Volkswagen Group and XPENG jointly announced that they have entered into a Master Agreement on Platform and Software strategic technical collaboration ("Master Agreement"), marking a further milestone following XPENG’s news releases dated July 26, 2023 and December 6, 2023 in connection with the Volkswagen’s acquisition of 4.99% shareholding in XPENG and the signing of the framework agreement on strategic technical cooperation.

Photo credit: Volkswagen Group

In line with the disclosed details, the focus of the latest technical cooperation revolves around the joint development of two B-segment battery electric vehicle (BEV) models under the Volkswagen brand, with the first being an SUV. Both models are slated for launch in 2026.

As part of the Master Agreement, the two companies have initiated a Joint Sourcing Program dedicated to the common parts of vehicles and platforms utilized by both parties. Through the collaborative utilization of the combined scale of both entities and tapping into the Volkswagen Group's top-tier supply chain capabilities, the Joint Sourcing Program aims to collaboratively drive down the platform's costs. This concerted effort is anticipated to yield substantial synergy effect, thereby enhancing the strategic partnership's overall effectiveness and bolstering the competitiveness of the co-developed B-segment BEVs.

Through joint procurement and the application of innovative technologies in vehicle design and engineering, the product development cycle is anticipated to shorten by more than 30%. Acting as the connection hub for this collaboration is Volkswagen China Technology Company (“VCTC”) located in Hefei, Volkswagen Group’s biggest development center outside Germany.

Ralf Brandstätter, Board Member of Volkswagen AG for China, expressed, “In the world's largest and fastest-growing 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 focusing 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 competitiveness in a highly price sensitive market environment significantly.”

"The signing of the Master Agreement represents another significant milestone we 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,” said Mr. Xiaopeng He, Chairman and CEO of XPENG. “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.”