Key Points

1. Hundreds of Volkswagen staff are spending time at Xpeng as the German auto giant and Chinese startup work to create electric cars for China, Xpeng co-president Brian Gu told CNBC.
2. Volkswagen in July 2023 announced a $700 million investment into Xpeng to jointly develop two electric cars for delivery in China, expected in 2026.
3. The partnership will help Xpeng’s global ambitions, Gu said.

But like many traditional foreign auto giants, Volkswagen has also struggled in China as the local market rapidly shifts towards battery-only and hybrid powered vehicles. The company’s China deliveries plunged by 19.3% in the quarter ended June from a year ago.

Xpeng CEO and Founder He Xiaopeng told Bloomberg last week that the Chinese automaker is in preliminary stages of selecting a site in the European Union as part of future plans for localizing production. The interview was published Tuesday.

Gu separately told reporters Monday that localization efforts in Southeast Asia would likely happen earlier than any in Europe.

The two companies in February announced that they had entered a “joint sourcing program” for auto parts.

• https://ir.xiaopeng.com/news-releases/news-release-details/xpeng-and-volkswagen-group-announce-entry-master-agreement
• XPENG and the Volkswagen Group entered into Master Agreement on Platform and Software strategic technical collaboration
• XPENG and the Volkswagen Group entered into Joint Sourcing Program to jointly reduce the cost of the Platform
• The joint development of B-class BEVs under Volkswagen brand has achieved a major project development milestone

Xpeng has invested in robotics since 2020 and is now focused on humanlike robots that can handle multiple tasks in factories, Gu told CNBC. He indicated Xpeng would likely reveal more details soon.