/ world today news/ For more than four decades, China, currently the world’s largest car market, has been trying to catch up with the West in both automotive and manufacturing. And the country is steadily building strength into greener battery-powered vehicles. The fact is that many traditional Chinese car manufacturers still cannot make an internal combustion engine for gasoline cars as good as their Western competitors, but in the new field of electric vehicles, they are expanding their capabilities and gaining global advantages.
XPeng, a fast-growing intelligent electric vehicle manufacturer, and German giant Volkswagen recently entered into a framework agreement for strategic technical cooperation and a share purchase deal to hold a strategic minority investment from Volkswagen in XPeng. The German concern will invest approximately $700 million in the Chinese company through a capital injection and will eventually own up to 4.99 percent of its shares.
The initial stage of the cooperation will provide for the joint development of two Volkswagen electric car models for the middle segment of the Chinese market by 2026, using the company’s core competencies and XPeng’s G9 platform and advanced driver assistance system software solutions ( ADAS). In addition, the two countries will further explore potential strategic cooperation in a number of other areas such as future electric vehicle platforms, software development and supply chains.
Volkswagen and XPeng bring highly complementary strengths to this long-term strategic partnership. We will share world-class smart technology, design and engineering capabilities with each other and learn from each other,” said Xie Xiaopeng, CEO of XPeng.
Commenting on the partnership, Ralf Brandstatter, CEO of Volkswagen China, noted: “Local partnerships are an important building block in our strategy. We are now accelerating the expansion of our local electric portfolio and at the same time preparing for the next innovation step”.
“The cooperation can bring more opportunities for XPeng to enter foreign markets by taking advantage of Volkswagen, and the deal proved that Chinese auto companies are gaining the recognition of global brands and capital,” said Cuei Dongshu, secretary general of China passenger car association.
Earlier this year, XPeng announced that its G9 sports car and P7 sports sedan would be available to order in European markets, including Denmark, Norway, the Netherlands and Sweden. XPeng started exporting its G3 model to Norway in December 2020.
In the domestic market, however, XPeng’s supply has not been satisfactory, with sales down 40 percent in the first half of the year. However, the company is hoping for a turnaround with its new G6 model in the second half of the year.
As for Volkswagen, the company is looking to regain its popularity in the Chinese market by launching a product that can win over the mass consumer, as it did in the gasoline-only era. To change the status quo, it needs to increase its efforts to improve car technology and software to make them more suitable for Chinese customers, an industry official told the Global Times on condition of anonymity.
While Volkswagen’s EV shipments rose 4.8% year-on-year to 89,700 units in the first half of the year, it still lags far behind domestic maker BYD and US rival Tesla, which share the top two places globally. In the first half of the year, BYD’s sales totaled 1.25 million vehicles, up 95.78% year-on-year, and Tesla sold 93,680 Chinese-made EVs in June alone, up 19% year-on-year year
The merger between Volkswagen and XPeng has the potential to set a precedent for more Western manufacturers to advance their local electrification strategy in China by seeking partnerships with Chinese companies experienced in producing electric vehicles.
Meanwhile, more Chinese auto firms are transforming from importers to leading technology exporters, according to an analysis by securities firm Ping An Securities. In recent years, the country’s electric vehicle sector has accumulated a number of world-class technologies and formed a complete supply chain. Moreover, in terms of electric cars, established foreign companies are far from reaching the leading level they hold in gasoline cars, and this creates opportunities for the Chinese to gain an upper hand in the development of new technologies, and this is the key to imposing China in this area.
“Electric motors, battery manufacturing and battery management system are generally considered the three key components of an electric vehicle, and China currently has a very good performance in each,” said Zhang Xiang, a professor at the University of Science and Technology’s School of Engineering. “Huanghu”.
Chinese battery giant CATL and BYD continued to dominate this sector in the first five months of the year, accounting for 36.3% and 16.1% of the global market respectively, according to the latest data from South Korean market research firm SNE. In addition to hardware, Chinese firms have gained advantages in smart technologies such as ADAS and wireless software systems.
In the first half of the year, China sold 3.75 million electric vehicles, up 44.1% year-on-year. Their market penetration is 28.3%, the highest in the world.
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