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Key Takeaways
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XPeng is partnering with Volkswagen to develop technology for the latter’s electric vehicles produced in China.
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Production is expected to begin on electrical/electronic architecture within two years.
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Volkswagen invested $700 million for a 4.99% stake in XPeng last year.
XPeng (XPEV) American depositary receipts (ADRs) surged on Monday after it said it would co-develop electrical/electronic (E/E) architecture with Volkswagen for the latter’s electric vehicles (EVs) produced in China.
Under a master agreement, engineers from both companies will collaborate on “Project House” in Guangzhou and Hefei, China, with production expected to start within two years.
VW Invested $700M in XPeng Last Year
The move follows a framework agreement between the two companies announced in April. Last July, Volkswagen invested $700 million for a 4.99% stake in XPeng.
“From 2026, all all-electric vehicles of the Volkswagen brand in China will be equipped with this very powerful and efficient architecture,” Volkswagen AG for China board member Ralf Brandstätter said, adding the partnership with XPeng is part of Volkswagen’s “in China for China” strategy.
ADRs of XPeng jumped 6.4% higher to $9.00 as of 2:41 p.m. ET Monday but are down nearly 40% year-to-date.
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