Master Agreement on E/E Architecture Technical Collaboration With Volkswagen Group

Rhea-AI Summary

XPENG and Volkswagen Group have entered into a Master Agreement on E/E Collaboration to jointly develop industry-leading E/E Architecture for locally produced vehicles based on Volkswagen's CMP and MEB platforms. This collaboration marks the third major milestone in their strategic partnership within a year.

Key points:

• Project Houses established in Guangzhou and Hefei for close collaboration
• First vehicle with jointly developed E/E Architecture to start production in approximately 24 months
• Both parties will explore expanding the scope of the E/E Architecture usage
• The agreement demonstrates trust and commitment in the strategic partnership

This collaboration aligns with Volkswagen's 'in China for China' strategy, focusing on Chinese customers and technological innovations.

Positive

• Strategic partnership with Volkswagen Group strengthened through E/E Architecture collaboration
• Potential for expanded collaboration and usage of jointly developed E/E Architecture
• Rapid execution of joint projects, demonstrating synergies between XPENG and Volkswagen
• First vehicle with new E/E Architecture to start production in approximately 24 months

Negative

• None.

Insights

Tech Expert

The collaboration between XPENG and Volkswagen to develop an industry-leading electrical/electronic (E/E) architecture signifies a major advancement in automotive technology. This partnership leverages Volkswagen's established platforms, such as the China Main Platform (CMP) and the Modular Electric Drive Matrix (MEB), to create more efficient and powerful systems for electric vehicles. The establishment of Project Houses in Guangzhou and Hefei will likely accelerate the innovation process, enabling both companies to bring superior products to market faster. In the long term, this collaboration could position both companies as leaders in the electric vehicle sector, particularly in China.

Market Research Analyst

The impact of this collaboration on the market is substantial. By integrating Volkswagen's established platforms with XPENG's local expertise, both companies stand to benefit from increased market share and enhanced brand reputation. The first vehicle with this new E/E architecture is expected to be in production within 24 months, which is relatively swift for such a significant technological advancement. Investors should note the potential for increased revenue and market penetration in the Chinese electric vehicle market, which continues to grow rapidly.

Financial Analyst

From a financial perspective, this collaboration could lead to significant cost savings and revenue growth for both XPENG and Volkswagen. Joint development and shared technological expertise can reduce R&D costs and speed up time-to-market for new models. Furthermore, the enhanced E/E architecture could lead to higher vehicle efficiency and performance, attracting more customers and potentially driving up sales. In the short term, there might be increased expenditure due to investment in the Project Houses, but the long-term financial benefits could outweigh these initial costs.

• XPENG and the Volkswagen Group will jointly develop industry-leading E/E Architecture for all locally produced vehicles based on Volkswagen’s China Main Platform (CMP) and Modular Electric Drive Matrix (MEB) platform
• The first vehicle equipped with the jointly developed E/E Architecture will SOP (Start of Production) within approximately 24 months
• Both parties will actively explore further collaboration opportunities to expand the scope of the usage of the jointly developed E/E Architecture
  

GUANGZHOU, China, July 22, 2024 (GLOBE NEWSWIRE) -- XPeng Inc. (the “Company” or “XPENG”) and the Volkswagen Group are pleased to announce today that, further to XPENG’s announcement dated April 17, 2024 (the “Announcement”) in connection with the framework agreement on technical collaboration with respect to electrical/electronic architecture (“E/E Architecture”), XPENG and the Volkswagen Group have entered into a Master Agreement on E/E Collaboration (“Master Agreement”) which solidifies both parties’ commitment to jointly develop industry-leading E/E Architecture for all locally produced vehicles based on Volkswagen’s China Main Platform (CMP) and Modular Electric Drive Matrix (MEB) platform. The execution of the Master Agreement not only signifies the expeditious joint development of E/E Architecture in China by the parties but also paves the way for potential expansion of collaboration on E/E Architecture.

Under the E/E Architecture technical collaboration, XPENG and the Volkswagen Group have established Project House in Guangzhou and Hefei for engineers from both parties to work closely together and accelerate the development process for E/E Architecture. Such close technical collaboration through Project House enables the first vehicle equipped with the jointly developed E/E Architecture to SOP (Start of Production) within approximately 24 months, demonstrating extensive trust and commitment throughout the strategic partnership of Volkswagen and XPENG.

In addition, under this Master Agreement, XPENG and the Volkswagen Group will actively explore further collaboration opportunities to expand the scope of the usage of the jointly developed E/E Architecture. Both parties recognize the possibility to replicate such collaboration and further enhance the partnership.

“The E/E Architecture collaboration marks the third major milestone we achieved within a year in our long-term strategic partnership with Volkswagen Group. With the trust built up between Volkswagen and XPENG as well as the dedication by engineers from both parties, we have been executing our joint projects swiftly and realized significant synergies. I look forward to broadening our technology collaboration and win-win strategic partnership,” said Mr. Xiaopeng He, Chairman and CEO of XPENG.

Ralf Brandstätter, Member of the Board of Management of Volkswagen AG for China, said: “The rapid progress in the close cooperation between the Volkswagen Group and XPENG underlines the great potential of this partnership. With the joint development of a highly modern E/E Architecture, in which both partners contribute their technological expertise, we are now taking the next step together. For us at Volkswagen, this project is also the next milestone in the consistent implementation of our "in China for China" strategy - with a clear focus on Chinese customers and technological innovations. From 2026, all all-electric vehicles of the Volkswagen brand in China will be equipped with this very powerful and efficient architecture.”

About XPENG
XPENG is a leading Chinese Smart EV company that designs, develops, manufactures, and markets Smart EVs that appeal to the large and growing base of technology-savvy middle-class consumers. Its mission is to drive Smart EV transformation with technology, shaping the mobility experience of the future. In order to optimize its customers’ mobility experience, XPENG develops in-house its full-stack advanced driver-assistance system technology and in-car intelligent operating system, as well as core vehicle systems including the powertrain and the electrical/electronic architecture. XPENG is headquartered in Guangzhou, China, with main offices in Beijing, Shanghai, Silicon Valley, San Diego and Amsterdam. XPENG’s Smart EVs are mainly manufactured at its plants in Zhaoqing and Guangzhou, Guangdong province. For more information, please visit https://www.xpeng.com.

About Volkswagen Group China
Volkswagen Group is one of the earliest and most successful international partners of China’s automobile industry. The company’s success story started in 1978 when the Volkswagen Group first began to engage with its Chinese counterparts. In 1984, SAIC Volkswagen Corporation Ltd., Volkswagen Group’s first joint venture in China, was founded in Shanghai. In 1991, FAW-Volkswagen Corporation Ltd. was established in Changchun. In 2017, the Volkswagen Group launched Volkswagen (Anhui) Automotive Company Limited, with a focus on the R&D and manufacture of new energy vehicles (NEVs). In 2021, the Audi FAW NEV Company was incorporated, focusing on the manufacture of luxury battery electric vehicles (BEVs) in China. The business scope of Volkswagen Group in China includes the production, sales and services of whole vehicles and parts, such as engines and transmissions. Some of the Group’s auto brands — including VGIC, Volkswagen Passenger Cars Brand, Volkswagen Commercial Vehicles, Audi, ŠKODA, JETTA, Porsche, Bentley, Lamborghini, and Ducati — have a business presence in China through Volkswagen Group China and its subsidiaries. In 2023, Volkswagen Group China delivered over 3.23 million vehicles to customers in the Chinese mainland and Hong Kong, together with its Chinese joint venture partners. By the end of 2023, Volkswagen Group China had over 90,000 employees.

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates” and similar statements. Statements that are not historical facts, including statements about XPENG’s beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: XPENG’s goals and strategies; XPENG’s expansion plans; XPENG’s future business development, financial condition and results of operations; the trends in, and size of, China’s EV market; XPENG’s expectations regarding demand for, and market acceptance of, its products and services; XPENG’s expectations regarding its relationships with customers, contract manufacturers, suppliers, third-party service providers, strategic partners and other stakeholders; general economic and business conditions; and assumptions underlying or related to any of the foregoing. Further information regarding these and other risks is included in XPENG’s filings with the SEC. All information provided in this press release is as of the date of this press release, and XPENG does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

Contacts:

For Investor Enquiries:
IR Department XPeng Inc.
Email: ir@xiaopeng.com

Jenny Cai
Piacente Financial Communications
Tel: +1 212 481 2050 / +86 10 6508 0677
Email: xpeng@tpg-ir.com

For Media Enquiries:
PR Department XPeng Inc.
Email: pr@xiaopeng.com
Source: XPeng Inc.

A photo accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/7461cbcd-bac2-430e-9731-50db26d2516d

FAQ

What is the purpose of the Master Agreement between XPENG and Volkswagen Group?

The Master Agreement aims to jointly develop industry-leading E/E Architecture for locally produced vehicles based on Volkswagen's CMP and MEB platforms, solidifying both parties' commitment to technical collaboration.

When is the first vehicle with the jointly developed E/E Architecture expected to start production for XPEV?

The first vehicle equipped with the jointly developed E/E Architecture is expected to start production (SOP) within approximately 24 months from July 22, 2024.

Where are the Project Houses for XPEV and Volkswagen's E/E Architecture collaboration located?

XPENG and Volkswagen Group have established Project Houses in Guangzhou and Hefei for engineers from both parties to work closely together on the E/E Architecture development.

How does this agreement align with Volkswagen's strategy in China?

This collaboration aligns with Volkswagen's 'in China for China' strategy, focusing on Chinese customers and technological innovations. From 2026, all all-electric Volkswagen brand vehicles in China will be equipped with this E/E Architecture.