On February 5th, Volkswagen Group (China) announced that the new Volkswagen-branded vehicle developed in collaboration with XPeng will commence production in Hefei in 2026.

As is well known, China is the largest single market for Volkswagen Group globally. Data shows that China accounts for one-third of Volkswagen Group's sales and is the main contributor to profits. "For Volkswagen Group, the Chinese market is comparable to the European market, and they are reluctant to give it up," said an industry insider.

According to the agreement, the two parties will jointly develop two Volkswagen-branded electric vehicles, which are planned to enter the market in 2026. For this purpose, Volkswagen Group will increase its investment in XPeng by approximately $700 million, acquiring approximately 4.99% of XPeng's shares, and will obtain an observer seat on XPeng's board of directors after the transaction is completed.