Volkswagen invests $700 million in Chinese EV maker Xpeng to boost sluggish sales

By Laura He for CNN Business – Volkswagen has bought nearly 5% of Chinese electric vehicle maker Xpeng for $700 million and agreed a strategic partnership to develop two new models as it attempts to reverse a decline in sales in the world’s biggest car market.

Subject to final agreement, the companies will join forces to develop two mid-sized VW-branded EVs for the Chinese market, to be rolled out in 2026, Volkswagen said in a statement.

The German group’s Audi subsidiary will also work more closely with its existing partner, SAIC Motor, China’s biggest car maker. Shares in Xpeng jumped more than 30% Thursday in Hong Kong, leading a broad rally in Chinese EV stocks.

China is the single largest market for Volkswagen, accounting for about 40% of its global sales and half of its profits. But the company faces sluggish sales and fierce competition from local rivals, such as BYD, and Tesla, global market leader in fully electric vehicles.

“Volkswagen Group is stepping up the pace of its transformation in China, where the group aims to remain … amongst the top three in the market,” the company said in an earnings statement Thursday.

The company reported a 14.5% drop in its deliveries in China in the first quarter. It saw a recovery in April and May but deliveries in the first half overall were still 1.2% down on the same period in 2022.

Volkswagen has bought nearly 5% of Chinese electric vehicle maker Xpeng for $700 million and agreed a strategic partnership to develop two new models as it attempts to reverse a decline in sales in the world’s biggest car market.

Subject to final agreement, the companies will join forces to develop two mid-sized VW-branded EVs for the Chinese market, to be rolled out in 2026, Volkswagen said in a statement.

The German group’s Audi subsidiary will also work more closely with its existing partner, SAIC Motor, China’s biggest car maker. Shares in Xpeng jumped more than 30% Thursday in Hong Kong, leading a broad rally in Chinese EV stocks.

China is the single largest market for Volkswagen, accounting for about 40% of its global sales and half of its profits. But the company faces sluggish sales and fierce competition from local rivals, such as BYD, and Tesla, global market leader in fully electric vehicles.

“Volkswagen Group is stepping up the pace of its transformation in China, where the group aims to remain … amongst the top three in the market,” the company said in an earnings statement Thursday.

The company reported a 14.5% drop in its deliveries in China in the first quarter. It saw a recovery in April and May but deliveries in the first half overall were still 1.2% down on the same period in 2022… Full article


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