To stop a decline in sales in its most significant market, Volkswagen AG wants to invest $700 million in Xpeng Inc. and collaborate on the development of electric vehicles in China. Through a capital raise, VW will eventually own 4.99% of the Chinese firm and have a seat on the board as an observer. To expand its EV offering, the premium Audi brand will strengthen its relationship with VW’s longtime ally SAIC Motor Corp Ltd. In China, where Tesla and the domestic leader BYD Co. have trounced Tesla and BYD in EV sales, VW is attempting to change the tide.
With these agreements, Volkswagen now has four automaker alliances in China, which is a turning moment for the nation’s manufacturers. The value of Xpeng’s American Depositary Receipts has increased by as much as 37%, and that of its Chinese rivals Nio Inc. and Li Auto Inc. The relationship between VW and SAIC will start with cars in a market class where the brand isn’t currently present in China and will include luxury EVs. The cars will be outfitted with cutting-edge electronics and software. Oliver Blume, the CEO of Volkswagen, has traveled to China on multiple occasions to support attempts to bring the company around, with a focus on infotainment, driver assistance features, and product customization for the Chinese market.
