The automakers stated in a statement that they will begin a collaborative sourcing program for platform and vehicle parts used by both partners, leveraging scale to lower cost, in accordance with a “master agreement” for platform and software collaboration.
With intentions to jointly debut two electric vehicles by 2026, Volkswagen and Xpeng announced in July that they will buy 4.99% of Xpeng for around $700 million. This statement represents a step ahead in their relationship. The acquisition was finished.
Volkswagen claims that advances in the design and engineering phases, along with economies of scale from joint purchasing, will reduce development time by more than thirty percent.
“In the world’s largest and fastest growing EV market, speed is fundamental.”
Ralf Brandstatter, Group Board Member and China Chief, Volkswagen
The company is attempting to reclaim market dominance in China that it lost to local competitors.
The cooperation will result in cars with the VW logo, but with a jointly created platform based on the startup’s ten-year-old G9 “Edward” technology.
VW lost the title of best-selling automaker in China to local EV producer BYD (002594.SZ), opens new tab in late 2022, as the automaker’s storied dependence on gasoline-powered vehicles, whose sales have been dropping, combined with competition from EV makers.
VW announced last year that it will create a new manufacturing platform for entry-level EVs in China that would be based on its modular “MEB” architecture and use more locally produced parts in order to reduce costs.
Additionally, it is spending almost $1.08 billion (about 1 billion euros) on a new EV development and procurement center in the city of Hefei.
For the first time since August, China’s sales of new energy vehicles decreased by 38.8% in January over December as demand was not stimulated by a fresh round of price reductions spearheaded by American electric vehicle manufacturer Tesla (TSLA.O) opens new tab.
While many electric vehicle manufacturers are scrambling to reduce expenses, Xpeng announced this month that it would employ 4,000 workers this year and spend millions on artificial intelligence in an attempt to survive what it called a “bloody sea” of rivalry.
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