Home » Volkswagen Announces $700 Million Investment in Xpeng Motors as Strategic Partnership Takes Shape

Volkswagen Announces $700 Million Investment in Xpeng Motors as Strategic Partnership Takes Shape

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Title: Volkswagen Announces $700 Million Investment in Xpeng Motors, Strengthening Partnership in Auto Parts Sector

Date: July 27, 2022

In a significant move for the Chinese auto industry, Volkswagen has announced a technical cooperation framework agreement with Xpeng Motors, along with a substantial investment of $700 million. The news comes as many companies respond to Xpeng Motors’ collaboration, indicating a positive outlook for the rise of self-owned brand automotive companies.

The negotiations between Volkswagen and Xpeng Motors reportedly began in the fourth quarter of last year. The first phase of this partnership will involve joint development based on Xpeng G9’s electric vehicle platform and software. Xpeng Motors will contribute the vehicle platform, smart cockpit, and smart driving system, while Volkswagen will provide its world-leading engineering and supply chain capabilities.

Upon the announcement, Xpeng Motors’ stocks surged. As of press time, their US stocks are up by more than 4%, following a remarkable 26% increase in closing prices yesterday. In Hong Kong, Xpeng Motors’ stocks rose by an impressive 34% by the end of the trading day.

Recognizing the significance of this partnership, several related companies have responded to their cooperation with Xpeng Motors. Meichen Eco, a Tier 1 supplier of Xpeng Motors, confirmed that they have multiple mass production projects in stable supply. Sulian shares announced that they have become a first-tier supplier of Xpeng Motors this year. Similarly, Zhonghai-Target stated that their vehicle-end software and hardware products have been designated for use in several mass-produced models by Xpeng. Jinlu Electronics also shared that their PCB products are utilized by Xpeng Motors.

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In the investor interaction platform, Ping An Securities Research Report highlighted that Volkswagen’s capital increase in Xpeng Motors, alongside their strategic cooperation with Xpeng and SAIC, marks a milestone event in China’s auto industry history. Furthermore, the report emphasized that this exchange of technology for the market would transform Chinese car companies from technology importers to technology exporters, particularly in the era of smart new energy vehicles.

Caitong Securities also expressed that the structure of the electric vehicle industry is being reshaped as more collaborations are expected to be implemented. Apart from the strategic cooperation with Xpeng Motors, Audi, a subsidiary of the Volkswagen Group, signed a memorandum with its Chinese joint venture partner, SAIC, to deepen existing cooperation. The partnership aims to expand the portfolio of intelligent connected electric vehicles in the high-end market. This includes Audi’s plans to enter market segments previously untapped in China by launching a new electric model. Analysts believe that self-owned brands will continue to expand collaborations with overseas giants due to their leading advantages in the smart electric vehicle field.

Guotai Junan welcomed Volkswagen’s stake in Xpeng Motors, noting that it would create a win-win situation for both parties. Additionally, this move further validates the technological leadership of Chinese auto brands in the smart electric vehicle sector. As a result, Guotai Junan recommended three main investment lines: the high prosperity new energy main line, the intelligent main line, and the self-owned brand main line.

The partnership between Volkswagen and Xpeng Motors signifies a significant step forward in the development of the Chinese auto industry. With a focus on smart electric vehicles and a shared commitment to technological advancements, this collaboration paves the way for further growth and innovation in the sector.

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