Volkswagen (VOW3.Germany) has decided to join forces with Chinese electric vehicle (EV) start-up XPeng (XPEV) in a strategic partnership. The German auto maker is investing a significant $700 million into XPeng, and together, they plan to develop two new EVs.
This partnership aims to leverage the distinct strengths of both companies. According to XPeng CEO Xianpeng He, XPeng has been working on various aspects of EV technology, such as EV platform development, connectivity solutions, and self-driving software. The collaboration with Volkswagen offers an exciting opportunity for XPeng to contribute its expertise and create value for both companies and their shareholders.
Following this announcement, XPeng’s U.S.-listed American depositary receipts experienced a notable increase of nearly 14% in early trading. Meanwhile, the S&P 500 and Nasdaq Composite saw marginal declines of 0.2% and 0.3% respectively. On the other hand, Volkswagen’s stock encountered a slight decrease of 2.4% in overseas trading.
This development also impacts other EV companies. Li Auto (LI) and NIO (NIO) observed positive movement in their respective stock prices, rising by 2.5% and 4%. The investments made by traditional car manufacturers in Chinese EV players bring a fresh source of capital into the mix. However, Tesla (TSLA), the global EV leader, faced a decrease of 0.4% in its stock price, while ADRs of BYD (BYDDY), the leading EV company in China, experienced a decline of 1.4%.
With this partnership, Volkswagen aims to reverse its declining market share in China. In the first half of this year, Volkswagen delivered approximately 62,000 battery-electric vehicles in China, which represented a 2% decline compared to the same period last year. Meanwhile, the overall market for battery-electric sales in China grew by around 30% in the first half, reaching approximately 2.5 million units.
XPeng, on the other hand, has encountered challenges of its own. The company delivered around 41,000 vehicles in the first half of 2023, which is a decrease from approximately 69,000 vehicles in the first half of 2022. It is worth noting that XPeng primarily focuses on the Chinese market for its sales.
The partnership between Volkswagen and XPeng holds great promise for the future of electric vehicles in China. Both companies will bring their unique strengths and expertise to the table, driving innovation and capturing new opportunities in the evolving EV market.