Xpeng’s U.S.-traded shares were up more than 40% on Wednesday morning following the news.
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Under the deal, Volkswagen and Xpeng will develop two midsize battery-electric models based on the platform that underpins Xpeng’s G9, a midsize electric crossover SUV.
In a separate statement confirming the deal, Xpeng said the two new vehicles will also incorporate its advanced driver-assist software.
The new EVs, which will be branded as VWs and sold only in China, are expected to launch in 2026.
Volkswagen is paying $15 per U.S.-traded share for its Xpeng stake and will receive a seat on the EV maker’s board of directors, subject to regulatory approvals.
Volkswagen also confirmed that its Audi subsidiary has signed a separate deal with its longtime Chinese joint venture partner, Shanghai-based SAIC Motor
“We are leveraging the strengths of Volkswagen and our partners to create synergies to bring additional products to market faster,” said Ralf Brandst?tter, Volkswagen’s China chief, in a statement. “In doing so, we focus on the specific needs of our customers in China. At the same time, we want to significantly optimize development and procurement costs.”