Volkswagen has bought a 5-percent share of Xpeng Motors, in an attempt to shore up poor sales in the Chinese market. Foreign automakers hold less and less appeal in China where VW sales have been waning for some time.
Photo by Fan Jianlei
By CHEN Xiaotong
German carmaker Volkswagen has acquired 5 percent of Xpeng Motors, the first time an overseas automaker has invested in a Chinese EV startup.
This collaboration comes in the face of poor VW sales. Using an in-house platform, sales of EVs have barely registered.
VW and Xpeng will work together on EVs built around Xpeng's G9 platform and sold under the VW banner. In terms of cockpits and driving assistance systems, Xpeng holds a prominent position among EV companies.
Exclusively for the Chinese market, and with production expected to start in 2026, the new cars show VW attempting to shift decision-making for the Chinese market from Wolfsburg to Anhui province in Eastern China, where Volkswagen (China) Technology Co., Ltd. will be based. Another JV, this time between VW and JAC, owns a factory in the province that will most likely make the planned vehicles, should they ever make it into production.
VW hopes these new products with added "Chinese characteristics" will regain some of its previous market share. The market share that was acquired by foreign entities in highly favorable circumstances no longer exists.
Unsurprisingly, foreign automakers hold less and less appeal since Chinese automakers became serious competition. The age of the half-foreign chimera is over in China
From the Xpeng point of view, Volkswagen is rightly perceived as an automotive giant with valuable management expertise, but giant automakers look increasingly like creatures of a bygone age.
All the advantages in the deal may be for Germany's "people's car," but Xpeng's pricing does not match its research and development investment, and profits are weak. In this deal, Xpeng will provide tech that is already in mass production with no development costs. Profits should rise far and fast.
In 1984, VW and SAIC established China's first automotive joint venture. Now, nearly every Chinese EV company is trying to sell part of itself to multinational corporations. There is even the threat of a domestic car brand being wholly acquired by a foreign automaker – a step many market watchers would consider backward.
The EV market is still evolving. Chinese automakers are well ahead in the EV race and need to be careful against the risks of technology misappropriation and talent poaching by foreign companies unable to do the job themselves.
