For the ramp-up of electric mobility in China, the Volkswagen Group will in future rely on a platform partnership with the Chinese electric car manufacturer Xpeng. In an extraordinary supervisory board meeting on Wednesday, the committee gave the green light for the cooperation.Together with Xpeng, VW wants to develop two new electric models for the mid-range segment, which will be available exclusively in China from 2026. In addition, the Supervisory Board cleared the way for cooperation between Audi and the Chinese manufacturer SAIC. According to a corporate statement, it was agreed in a strategic memorandum to expand the existing cooperation. The plan is to initially start with electric models in a segment in which Audi is not yet represented in China. According to company circles, these should be electric sedans in the format of today’s A3 and A4 models. The Handelsblatt reported on the cooperation on Friday.
Volkswagen has miscalculated in China and, according to experts, is now dependent on help. In the largest electric car market in the world, the battery-electric models from Wolfsburg can neither keep up with their Chinese competitors nor with the US carmaker Tesla.
Current insurance data shows that VW registered just 38,000 electric cars in China in the first half of the year. The market share is less than two percent. Chinese competitor BYD sold over half a million electric cars in the same period.
VW will pay $700 million for five percent Xpeng
VW is paying a lot for the tutoring from China. The group is investing around 700 million dollars in Xpeng and is thus acquiring around five percent of the shares and a seat on the supervisory board of the company, which was founded in 2014. The aim of the partnership is to accelerate the expansion of the local electric portfolio, says VW China board member Ralf Brandstätter. “With Xpeng, we now have another strong partner who is one of the leading manufacturers in China in important technology areas.”
Brandstätter recently met Xpeng founder He Xiaopen several times. In the talks, he signaled that he could imagine long-term cooperation with VW, according to company circles.
VW China boss Ralf Brandstätter
“With Xpeng, we now have another strong partner who is one of the leading manufacturers in China in important technology areas.”
(Photo: Volkswagen AG)
The two new electric vehicles are being developed at Volkswagen’s new development center in the southern Chinese city of Hefei. In the unit, teams from Xpeng and VW will each work on the new vehicles. The cars are sold with the VW logo.
Xpeng contributes software solutions, automated driving applications and intelligent voice assistants to the collaboration. “We can learn from each other, especially when it comes to design and development skills,” says the Xpeng founder. Since it was founded, the company has developed its own electronic platforms and software for driver assistance systems, among other things, he says.
On the other hand, according to Volkswagen, the Chinese electric start-up benefits from economies of scale and joint purchasing. Xpeng sold around 120,000 vehicles in the People’s Republic last year, and VW almost 2.2 million.
ID.7 from Volkswagen in Shanghai
The models from Wolfsburg have not been well received by Chinese customers so far.
(Photo: Reuters)
Ferdinand Dudenhöffer, head of the Center Automotive Research (CAR), is already talking about a paradigm shift that is emerging. “The cooperation between Xpeng and Volkswagen, Europe’s largest car manufacturer, and the cooperation between Audi and SAIC show that the car of the future is no longer conceivable without the help of Chinese car manufacturers,” says Dudenhöffer.
However, the process also shows how little Volkswagen has confidence in turning the tide in China with the self-developed MEB platform. According to internal documents available to the Handelsblatt, the Wolfsburg-based company sees a kind of “safety net” for the MEB and the further development MEB+ in the Xpeng platform until the uniform electrical platform SSP is introduced and replaces the previous technology.
Volkswagen is only growing with combustion engines in China
Because with the current electric models, Volkswagen cannot participate in the strong growth of the electric car market in China. The problem: Internally, the carmaker expects the so-called tipping point in the People’s Republic as early as 2025. This is the time when just as many cars with electric and combustion engines will be newly registered.
At the moment, however, Volkswagen is only growing with cars with combustion engines. According to Handelsblatt calculations, the market share there rose from 13.2 to 13.9 percent in the second quarter. Since the beginning of the year, VW has sold over 900,000 cars with internal combustion engines in China. On the other hand, there are only around 57,000 plug-in hybrids and purely battery-electric models.
In order to be able to play quickly in the market for electric cars, the models are to be introduced in cooperation with Xpeng alongside the existing electric models ID.3, ID.4 and ID.6. These cars are based on the “modular electric drive kit” (MEB) developed by VW but which is hardly competitive in China.
With the support of Xpeng, Volkswagen can now bridge the time until VW has developed a successor to the MEB platform. Because that is not enough for China. Among other things, the lack of charging power is criticized. On the other hand, Volkswagen has to economize with its development capacities. The predecessor of Volkswagen boss Oliver Blume, Herbert Diess, had ordered several technical platforms to be developed at the same time, and thus overwhelmed the group.
Parallel to the development of the MEB platform, Audi worked on the so-called PPE platform and other group developers in turn on the SSP standard platform. The result: Both the introduction of the PPE and the SSP are massively delayed.
Within the group, the Chinese market is therefore referred to as the “Diess construction site”. The former CEO is said to have neglected to keep the competition in the Far East at bay. China boss Ralf Brandstätter and CEO Oliver Blume are therefore trying to redirect.
More: Volkswagen is creating space in China to build electric cars
First publication: 07/26/2023, 3:06 p.m. (last updated: 07/26/2023, 5:53 p.m.).