Are XPENG & Volkswagen A Match Made In Heaven?

By Imran Last updated Jan 7, 2025

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XPENG and the Volkswagen Group have come collectively in a number of huge methods now to collaborate and assist one another. It’s an fascinating partnership, and one which retains rising and evolving. The most recent step they’ve taken collectively is a plan to construct a a lot bigger super-fast charging community collectively than alone. The end result will probably be “one of many largest super-fast charging networks in China, granting mutual entry to respective proprietary, industry-leading super-fast charging networks.”

XPENG & Volkswagen Group — Opposites Entice

There are a few issues about this rising partnership that I feel are fascinating and noteworthy at this level.

For one, they’re vastly totally different corporations. XPENG is a younger tech-oriented firm created by tech individuals that’s targeted on the time period “sensible electrical automobiles,” not simply “electrical automobiles,” that’s attempting to scale up in an effort to turn out to be worthwhile and survive long run. Volkswagen Group is likely one of the most legacy of legacy automakers, has expanded throughout the globe and fights for the title of largest automaker/auto group on this planet, however has struggled to innovate successfully has automobiles have more and more turn out to be “computer systems on wheels.” It has tried to be a pacesetter in EVs, however its tech isn’t almost as superior as younger XPENG’s. On the similar time, as China is electrifying shortly, Volkswagen Group is doing its greatest to carry onto the market share it has there at a time when legacy automakers from the West appear destined to be squeezed out of the most important auto market on this planet. Can Volkswagen Group preserve a robust foothold, and even develop its share, by way of a detailed partnership with XPENG? Can XPENG discover extra clients and develop geographically, and possibly even minimize auto manufacturing prices, by way of a detailed partnership with Volkswagen Group?

In some regards, it looks as if a match made in heaven, a case the place opposites appeal to as a result of they complement one another. In fact, opposites may simply fall out with one another. We’ll have to attend and see the place this partnership leads.

Surviving China

The second factor — I assume touched on a bit of above already — is that the fast-changing Chinese language auto market is a cutthroat market the place everyone seems to be struggling to scale up (or avoiding far more cutting down) whereas slicing prices and innovating quickly. The speed of innovation within the Chinese language auto market is notably larger than in Europe and the US, and there appears to be a worth struggle simply across the nook of each web page of the calendar. Just a few huge gamers within the EV market are doing fairly nicely — BYD, Tesla, and Geely. And you then’ve bought the smartphone big Xiaomi flying in and instantly capturing up the ranks, and doubtlessly Foxconn on the verge of doing one thing related. To continue to grow and survive, we could also be getting into an period of massive partnerships, alliances, and mergers. Volkswagen and XPENG appear to have seen that they want one another, or at the least that they’re extra aggressive teaming up than on their very own. You get the sense that is all constructing towards a a lot deeper marriage, maybe a merger/acquisition. We’ll have to attend to see.

Again to the brand new charging MOU (memorandum of understanding), “Over 20,000 charging piles operated by each events throughout 420 cities in China will probably be accessible to clients of each XPENG and Volkswagen Group China.” They are going to discover co-branding charging stations. In brief, this can be a method for the 2 frenemies to out-attract their opponents and provide a greater EV life to their automobile patrons. If they will’t beat Tesla or some others on their very own, maybe they will accomplish that collectively.

The precedence is clearly China, however I ponder about their potential partnership in related methods in Europe ultimately. “This strategic collaboration marks the fourth milestone within the long-term strategic partnership between XPENG and Volkswagen Group. Each events plan to discover additional strategic collaboration alternatives, broadening know-how collaborations, and strengthening the win-win strategic partnership.” Which would be the fifth milestone of their rising relationship?

XPENG & Volkswagen Historical past

For extra historical past on this partnership, let’s have a look at their first huge strikes. A yr and a half in the past, Volkswagen invested $700 million into XPENG, and so they started “joint growth of clever, totally related electrical automobiles (ICV) for the Chinese language market.” Then, on the finish of February 2024, “they introduced quick co-development of two new sensible automobiles,” and in April 2024, they introduced co-development of some new electrical automobile structure. Just a few months in the past, it was reported that lots of of Volkswagen workers had been at XPENG headquarters, “studying concerning the startup’s know-how.”

So, now, the partnership strikes on with super-fast charging in China.

XPENG’s Sensible EV Progress

I’m wanting to see the fruits of this collaboration in additional superior tech in Volkswagen automobiles. I think about that can include an entire new EV collection, or maybe simply huge upgrades to current fashions, however we aren’t near that but. Updates rolled out a number of days in the past by XPENG present us the place Volkswagen might be headed, although:

“XPENG, a number one Chinese language future mobility firm, has introduced the worldwide rollout of its newest over-the-air (OTA) software program replace, XOS 5.4, bringing superior clever driving, enhanced security options, and personalised experiences to its customers worldwide,” XPENG writes.

“With the replace, the XPENG Assistant now helps voice management in a number of languages, together with English, French, German, Cantonese, and Thai. This expanded language assist permits for intuitive interactions with navigation, automobile controls, and media, making the XPENG driving expertise much more accessible to drivers and passengers world wide.”

“A standout function of XOS 5.4 is the ‘AI Guard’ system, which introduces superior security instruments for even better peace of thoughts. Sentry Mode, as an example, displays and information suspicious exercise across the automobile when unoccupied, comparable to surprising movement or extended loitering close to the automobile. Notifications are despatched on to the person’s XPENG app, making certain customers are all the time knowledgeable of potential dangers. The Driving Recorder function enhances security throughout journey by capturing important occasions in real-time, and storing key footage securely for simple entry later (Resulting from regulatory restrictions, this function is briefly unavailable in some areas).” Effectively, that sounds acquainted, doesn’t it?

“Sensible driving capabilities additionally embrace Sensible Velocity Restrict Recognition, which identifies highway indicators like ‘No Entry’ and off-ramp signage to advertise safer, extra knowledgeable driving experiences.” That goes past what Tesla’s FSD appears to have the ability to deal with proper now.

“The replace additionally consists of the improved Personalised Working System 2.0, that includes enhancements comparable to multitasking split-screen performance and better flexibility in customizing infotainment layouts with the XDock system.” That every one sounds fairly good.

When will Volkswagen get all of those sorts of issues in its EVs?