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XPENG and the Volkswagen Group have come together in a few big ways now to collaborate and help each other. It’s an interesting partnership, and one that keeps growing and evolving. The latest step they’ve taken together is a plan to build a much larger super-fast charging network together than alone. The result will be “one of the largest super-fast charging networks in China, granting mutual access to respective proprietary, industry-leading super-fast charging networks.”
XPENG & Volkswagen Group — Opposites Attract
There are a couple of things about this growing partnership that I think are interesting and noteworthy at this point.
For one, they are vastly different companies. XPENG is a young tech-oriented company created by tech people that is focused on the term “smart electric vehicles,” not just “electric vehicles,” that is trying to scale up in order to become profitable and survive long term. Volkswagen Group is one of the most legacy of legacy automakers, has expanded across the globe and fights for the title of largest automaker/auto group in the world, but has struggled to innovate effectively has cars have increasingly become “computers on wheels.” It has tried to be a leader in EVs, but its tech is not nearly as advanced as young XPENG’s. At the same time, as China is electrifying quickly, Volkswagen Group is doing its best to hold onto the market share it has there at a time when legacy automakers from the West seem destined to be squeezed out of the largest auto market in the world. Can Volkswagen Group maintain a strong foothold, and even grow its share, via a close partnership with XPENG? Can XPENG find more customers and grow geographically, and maybe even cut auto production costs, via a close partnership with Volkswagen Group?
In some regards, it seems like a match made in heaven, a case where opposites attract because they complement each other. Of course, opposites can also easily fall out with each other. We’ll have to wait and see where this partnership leads.
Surviving China
The second thing — I guess touched on a little above already — is that the fast-changing Chinese auto market is a cutthroat market where everyone is struggling to scale up (or avoiding much more scaling down) while cutting costs and innovating rapidly. The rate of innovation in the Chinese auto market is notably higher than in Europe and the US, and there seems to be a price war just around the corner of every page of the calendar. A few big players in the EV market are doing quite well — BYD, Tesla, and Geely. And then you’ve got the smartphone giant Xiaomi flying in and immediately shooting up the ranks, and potentially Foxconn on the verge of doing something similar. To keep growing and survive, we may be entering an era of big partnerships, alliances, and mergers. Volkswagen and XPENG seem to have seen that they need each other, or at least that they are more competitive teaming up than on their own. You get the sense this is all building toward a much deeper marriage, perhaps a merger/acquisition. We’ll have to wait to see.
Back to the new charging MOU (memorandum of understanding), “Over 20,000 charging piles operated by both parties across 420 cities in China will be accessible to customers of both XPENG and Volkswagen Group China.” They will explore co-branding charging stations. In short, this is a way for the two frenemies to out-attract their competitors and offer a better EV life to their vehicle buyers. If they can’t beat Tesla or some others on their own, perhaps they can do so together.
The priority is clearly China, but I wonder about their potential partnership in similar ways in Europe eventually. “This strategic collaboration marks the fourth milestone in the long-term strategic partnership between XPENG and Volkswagen Group. Both parties plan to explore further strategic collaboration opportunities, broadening technology collaborations, and strengthening the win-win strategic partnership.” Which will be the 5th milestone in their growing relationship?
XPENG & Volkswagen History
For more history on this partnership, let’s look at their first big moves. A year and a half ago, Volkswagen invested $700 million into XPENG, and they began “joint development of intelligent, fully connected electric vehicles (ICV) for the Chinese market.” Then, at the end of February 2024, “they announced fast co-development of two new smart cars,” and in April 2024, they announced co-development of some new electric vehicle architecture. A few months ago, it was reported that hundreds of Volkswagen staff were at XPENG headquarters, “learning about the startup’s technology.”
So, now, the partnership moves on with super-fast charging in China.
XPENG’s Smart EV Progress
I’m eager to see the fruits of this collaboration in more advanced tech in Volkswagen cars. I imagine that will come with a whole new EV series, or perhaps just big upgrades to existing models, but we aren’t close to that yet. Updates rolled out a few days ago by XPENG show us where Volkswagen could be headed, though:
“XPENG, a leading Chinese future mobility company, has announced the global rollout of its latest over-the-air (OTA) software update, XOS 5.4, bringing advanced intelligent driving, enhanced safety features, and personalized experiences to its users worldwide,” XPENG writes.
“With the update, the XPENG Assistant now supports voice control in multiple languages, including English, French, German, Cantonese, and Thai. This expanded language support allows for intuitive interactions with navigation, car controls, and media, making the XPENG driving experience even more accessible to drivers and passengers around the world.”
“A standout feature of XOS 5.4 is the ‘AI Guard’ system, which introduces advanced safety tools for even greater peace of mind. Sentry Mode, for instance, monitors and records suspicious activity around the vehicle when unoccupied, such as unexpected motion or prolonged loitering near the car. Notifications are sent directly to the user’s XPENG app, ensuring users are always informed of potential risks. The Driving Recorder feature enhances safety during travel by capturing critical events in real-time, and storing key footage securely for easy access later (Due to regulatory restrictions, this feature is temporarily unavailable in some regions).” Well, that sounds familiar, doesn’t it?
“Smart driving capabilities also include Smart Speed Limit Recognition, which identifies road signs like ‘No Entry’ and off-ramp signage to promote safer, more informed driving experiences.” That goes beyond what Tesla’s FSD seems to be able to handle right now.
“The update also includes the enhanced Personalized Operating System 2.0, featuring improvements such as multitasking split-screen functionality and greater flexibility in customizing infotainment layouts with the XDock system.” That all sounds pretty good.
When will Volkswagen get all of these kinds of things in its EVs?
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