- Volkswagen and Xpeng will jointly develop two new VW-brand EVs for the Chinese market.
- Volkswagen is investing $700 million in Xpeng and taking a roughly 5% stake.
- The new EVs will be based on the platform that underpins Xpeng's G9 SUV.
Volkswagen said Wednesday that it has signed a deal to jointly develop two new electric vehicles for China with Chinese EV maker Xpeng. As part of the deal, Volkswagen will invest about $700 million in Xpeng, taking a 4.99% stake.
Xpeng's U.S.-traded shares ended the day up over 26% following the news.
Under the deal, Volkswagen and Xpeng will develop two midsize battery-electric models based on the platform that underpins Xpeng's G9, a midsize electric crossover SUV.
In a separate statement confirming the deal, Xpeng said the two new vehicles will also incorporate its advanced driver-assist software.
The new EVs, which will be branded as VWs and sold only in China, are expected to launch in 2026.
Volkswagen is paying $15 per U.S.-traded share for its Xpeng stake and will receive a seat on the EV maker's board of directors, subject to regulatory approvals.
Volkswagen also confirmed that its Audi subsidiary has signed a separate deal with its longtime Chinese joint venture partner, Shanghai-based SAIC Motor, to jointly develop new Audi-branded EVs for the Chinese market. The plan is to develop new EVs in segments where Audi does not currently have entries in China, the company said.
"We are leveraging the strengths of Volkswagen and our partners to create synergies to bring additional products to market faster," said Ralf Brandstätter, Volkswagen's China chief, in a statement. "In doing so, we focus on the specific needs of our customers in China. At the same time, we want to significantly optimize development and procurement costs."