Xpeng and Volkswagen Forge Collaborative Sourcing Program to Drive Down Platform Costs.
Xpeng (NYSE: XPEV) and Volkswagen Group have solidified a new partnership aimed at expediting the development of collaborative vehicle models and reducing expenses through joint sourcing to maintain competitiveness in China’s fiercely contested market.
Through this collaborative initiative, Xpeng and Volkswagen will jointly source common components for vehicles and platforms used by both entities. By pooling their combined scale and tapping into Volkswagen’s established supply chain, the program aims to significantly lower platform costs, fostering substantial synergies for their strategic partnership and enhancing the competitiveness of their B-class battery electric vehicles (BEVs), as stated by Xpeng.
Ralf Brandstätter, a board member of Volkswagen AG for China, emphasized the efficiency and cost structure optimizations resulting from the partnership with Xpeng, stating that such enhancements greatly elevate competitiveness in a market environment highly sensitive to pricing.
The joint sourcing program is a key component of a broader master agreement on platform and software strategic technical collaboration with Volkswagen, disclosed by Xpeng. This overarching agreement will expedite the joint development of two B-class BEVs and lay the groundwork for expanded collaboration in the future.
While specifics on the joint models were not elaborated upon in Xpeng’s statement, Volkswagen’s announcement revealed plans to initially co-develop two Volkswagen-branded midsize vehicles, with the first being an SUV. Through collaborative development efforts, Volkswagen anticipates shortening the product launch cycle by over 30 percent, with the initial two models slated for release in 2026.
Xpeng and Volkswagen will leverage their respective strengths, including Xpeng’s G9 platform, connectivity, and Advanced Driver Assistance System (ADAS) software, to manufacture the two models, as previously outlined by the Chinese EV manufacturer.
Acknowledging the significance of the partnership, He Xiaopeng, chairman and CEO of Xpeng, expressed optimism regarding the potential for cost reduction through strategic cooperation in the supply chain. He highlighted the early realization of synergies through the Joint Sourcing Program and emphasized the considerable upside potential inherent in the partnership.
China’s EV market, the world’s largest, is fiercely competitive, with cost control playing a pivotal role in determining vehicle prices. The recent resurgence of price competition following the Chinese New Year holiday has intensified pressure on all market players, prompting accelerated model launches and refreshes from companies such as BYD (HKG: 1211, OTCMKTS: BYDDY), Zeekr, and Nio (NYSE: NIO) to maintain competitiveness.
