Chinese electric vehicle maker, XPeng (NYSE:XPEV) announced alongside Volkswagen (ETR:VOWG_p) that the two automakers have entered into a strategic technical collaboration and share purchase agreement. This move will facilitate a strategic minority investment by the Volkswagen Group in XPeng.
The agreement involves the issuance of Class A ordinary shares, representing approximately 4.99% of XPeng's outstanding share capital immediately after closing, to the Volkswagen Group. These shares are priced at $15 per American depositary share, resulting in a total transaction value of roughly $700 million.
The share issuance will be subject to customary closing conditions including applicable regulatory approvals.
Also, as part of the strategic technical collaboration, XPeng and the Volkswagen Group are set to jointly develop two B-class battery electric vehicles to be sold in the Chinese market under the Volkswagen brand. The models will take advantage of XPeng’s G9 platform, and Connectivity and ADAS software. Commencement of production for these models is scheduled for 2026.
Ralf Brandstätter, Volkswagen AG Board Member for China, commented, “Local partnerships are a key building block in the Volkswagen Group’s ‘in China for China’ strategy. Together with XPeng, we are now forming a strong cooperation and speeding up the expansion of our local electric portfolio and at the same time preparing ourselves for the next step change in innovation."
Additionally, the parties will investigate further potential strategic partnerships in various sectors. These include cooperation on future electric vehicle platforms, software technologies, and supply chain management.
“The Volkswagen Group and XPENG each brings in highly complementary strengths into this long-term strategic partnership. We will share Smart EV technologies and world-class design and engineering capability with each other and learn from each other,” said Xiaopeng He, chairman and CEO of XPeng.
Shares of XPEV are up 36.10% in morning trading on Wednesday.