Volkswagen China is spending lots of time at Xpeng to make new EVs

BEIJING — Hundreds of Volkswagen staff are spending time at Xpeng as the German auto giant and Chinese startup work to create electric cars for China, Xpeng co-president Brian Gu told CNBC on Monday.

He also said the partnership will help Xpeng’s global ambitions.

Volkswagen in July 2023 announced a $700 million investment into Xpeng to jointly develop two electric cars for delivery in China in 2026. The vehicles will be based on the platform for Xpeng’s G9, a midsize electric crossover SUV.

The German company’s workers are spending more time at Xpeng’s offices than the startup’s are at Volkswagen’s, Gu said. They are learning about the startup’s technology.

Xpeng’s driver-assist technology is widely considered one of the best currently available in China. Tesla’s version, marketed as “full self-driving,” isn’t fully accessible in China.

The German automaker did not immediately respond to a request for comment.

Gu emphasized the forthcoming vehicles will be “very different” from those that currently sold by Xpeng or Volkswagen. He said the cars would likely have “better range, charging, much smarter driving, more feature luxury technology, for the same price, potentially.”

China is a key market for Volkswagen. The German automaker delivered 3.2 million cars in China last year, more than the 3.1 million in all of Western Europe.

But like many traditional foreign auto giants, Volkswagen has also struggled in China as the local market rapidly shifts towards battery-only and hybrid powered vehicles. The company’s China deliveries plunged by 19.3% in the quarter ended June from a year ago.

While Xpeng saw second-quarter deliveries grow by 30% year-on-year to more than 30,200 vehicles, the startup lags behind many of its Chinese rivals.

The company has, meanwhile, pushed overseas, as have Chinese electric car companies BYD and Nio. In the second quarter, Xpeng said its overseas sales exceeded 10% of total revenue for the first time.

Xpeng CEO and Founder He Xiaopeng told Bloomberg last week that the Chinese automaker is in preliminary stages of selecting a site in the European Union as part of future plans for localizing production. The interview was published Tuesday.

Asked for comment, Xpeng said it shared during the Beijing auto show in the spring that the company is considering the possibility of overseas production.

Gu separately told reporters Monday that localization efforts in Southeast Asia would likely happen earlier than any in Europe.

He said the 10-year-old startup aims to reach at least 40 countries and regions by the end of this year, up from around 30 so far.

Xpeng launched in Thailand, Hong Kong and Macao earlier this month. Gu said that this week, the startup is launching in Malaysia, and officially unveiling its entry into Singapore, where Xpeng has a pop-up store.

The startup also plans to enter Australia, New Zealand, the U.K. and Ireland, Gu said.

Speaking on how the Chinese company is learning from its German partner, Gu said that Xpeng staff visit Volkswagen offices in the city of Hefei, the capital of China’s Anhui Province, for design and technology, and Beijing for supply chain discussions.

The two companies in February announced that they had entered a “joint sourcing program” for auto parts.

Xpeng has invested in robotics since 2020 and is now focused on humanlike robots that can handle multiple tasks in factories, Gu told CNBC. He indicated Xpeng would likely reveal more details soon.

But when asked whether that humanoid integration included Volkswagen-related supply chains, he said it was too early for such implementation.

— CNBC’s Sonia Heng contributed to this report.