BUSINESS

XPeng’s EV Tech to Power Volkswagen’s Gas and Hybrid Lineup in China

Published: Aug. 16, 2025 2:11 a.m. GMT+8

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Volkswagen invested around $700 million in XPeng in July 2023, acquiring a 4.99% stake

Volkswagen AG is deepening its partnership with XPeng Inc. to bring the Chinese electric-car maker’s advanced digital systems to Volkswagen’s gasoline and hybrid models in China, extending a technology alliance that had originally targeted electric vehicles (EVs).

The companies began collaborating in April 2024 to develop a next-generation electronic and electrical architecture for Volkswagen’s EVs in China, with the goal of beginning mass production of the first Volkswagen-brand vehicle built with the CEA platform in 2026.

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Volkswagen is expanding its partnership with XPeng to integrate XPeng's advanced digital systems into Volkswagen's gasoline and hybrid models in China.
Volkswagen invested $700 million for a 4.99% XPeng stake, with the collaboration now covering software and vehicle architecture beyond electric vehicles.
XPeng’s Q1 2024 auto services revenue rose 43.6% year-on-year to 1.44 billion yuan ($200 million), mainly due to technical services for Volkswagen.

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Who’s Who

Volkswagen AG: Volkswagen AG is expanding its partnership with XPeng Inc., integrating XPeng's advanced digital systems into Volkswagen's gasoline, hybrid, and electric vehicles in China. This collaboration aims to modernize Volkswagen's offerings and leverage Chinese technology to stay competitive. Volkswagen initially invested $700 million in XPeng, acquiring a 4.99% stake to jointly develop electric models.

XPeng Inc.: XPeng Inc. is a Chinese electric-car manufacturer that is partnering with Volkswagen AG. Their collaboration, initially focused on EVs, now extends to integrating XPeng's advanced digital systems into Volkswagen's gasoline and hybrid models in China. This move aims to modernize Volkswagen's offerings and allows XPeng to monetize its software by licensing it to traditional automakers. Volkswagen invested $700 million in XPeng, acquiring a 4.99% stake.

Huawei Technologies Co. Ltd.: Audi partnered with Huawei Technologies Co. Ltd. to incorporate assisted driving features into a gasoline sedan developed with SAIC Motor. This collaboration highlights the trend of global automakers leveraging Chinese tech for advanced vehicle functionalities.

SAIC Motor: SAIC Motor is a Chinese automotive manufacturing company. Audi, Volkswagen's premium brand, recently partnered with SAIC Motor to integrate assisted driving features into a gasoline sedan. This collaboration highlights a broader trend of global automakers leveraging Chinese technology to enhance their traditional vehicle offerings.

FAW-Volkswagen: A new gasoline SUV from FAW-Volkswagen is equipped with an autonomous driving system supplied by Zhuoyu Technology, a Chinese company. This highlights the trend of global automakers integrating Chinese technology into their traditional combustion engine vehicles to enhance features.

Zhuoyu Technology: Zhuoyu Technology (卓驭科技) is a Chinese supplier of technology for the automotive industry. It provided an autonomous driving system for a new gasoline SUV from FAW-Volkswagen, highlighting a trend where global automakers are integrating Chinese tech into their vehicles.

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What Happened When

July 2023：: Volkswagen initially invested around $700 million in XPeng, acquiring a 4.99% stake.

April 2024：: Volkswagen AG and XPeng began collaborating to develop a next-generation electronic and electrical architecture for Volkswagen’s EVs in China.

First quarter of 2025：: XPeng’s auto services revenue surged 43.6% year-on-year to 1.44 billion yuan, credited largely to technical R&D services rendered to Volkswagen.

May 2025：: On XPeng’s first-quarter earnings call, Vice President Zhang Xiaofeng said the project was moving quickly, with some products expected to be production-ready within a year (by May 2026).

August 15, 2025：: XPeng announced the verification that the China Electronic Architecture (CEA) can be integrated into internal combustion engines and hybrid systems.

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