VW, Audi Embrace China Tie-Ups

While most companies are following domestic government moves to distance themselves from commercial dependency on China, the Volkswagen Group is strengthening its ties.

Both the Volkswagen and Audi brands have announced new commercial partnerships with two Chinese automotive giants in a bid to expand their e-mobility sales in China’s huge domestic market. The VW brand has signed an agreement with Xpeng and Audi, the VW Group’s luxury brand, has done the same with SAIC.

This comes just two months after Group executives had to defend their decision to jointly own a plant in the Xinjiang region after activists and investors attacked VW at a rowdy annual general shareholder meeting.

A group of activists, including one topless woman with “Dirty Money” painted on her back, interrupted executives’ speeches, shouting that the automaker’s vehicles were built with forced labor and waving banners that read: “End Uyghur Forced Labor.” China has been accused of violating the human rights of Uyghurs, a mainly Muslim ethnic group in northwest China.

Ignoring these protests, and also a call by German government officials for companies to wind down their reliance on China, the VW brand has concluded a technological framework agreement with Xpeng.

The initial stage of the cooperation will provide for the joint development of two of the brand’s electric models for the midsize segment in China’s market. The China-specific vehicles will supplement the MEB product portfolio and are to be rolled out in 2026.

As part of the close and long-term strategic cooperation, the Volkswagen Group is to invest approximately $700 million in the Chinese manufacturer of intelligent electric vehicles. Volkswagen is thus acquiring a 4.99% stake in Xpeng and will hold a seat as an observer on the Xpeng board of directors.

Meanwhile, Audi has signed a strategic memorandum with its Chinese joint-venture partner SAIC to expand existing cooperation. Joint development activities include extending the portfolio of fully connected electric vehicles on offer in the premium segment. It is planned to start with electric models in a segment where Audi does not as yet have a presence in China.

Wards reported earlier that Audi was to sign an agreement with SAIC for the purchase of intellectual property rights to an electric-vehicle platform used by the Chinese state-owned automaker’s upmarket brand, IM Motors. The platform is to underpin a series of upcoming EVs following delays to the Scalable Systems Platform (SSP) being developed by the Volkswagen Group.

Ralf Brandstaetter_0

“In a competitive and dynamic market environment, we are leveraging the strengths of Volkswagen and our partners to create synergies to bring additional products to market faster. In doing so, we focus on the specific needs of our customers in China. At the same time, we want to significantly optimize development and procurement costs.”

– with Greg Kable