XPeng (NASDAQ:XPEV) won a partnership with Volkswagen (OTCMKTS:VWAGY) on the design of future Chinese electric vehicles (EVs).
The German company signed a “framework agreement” for an Electrical/Electronic (E/E) system as part of VW’s China Main Platform (CMP). VW will be using the CMP in its vehicles for the Chinese market starting in 2026.
XPEV stock opened this morning at $7.46 per share in New York. That’s a market cap of $6.75 billion. VW is worth about $75 billion.
China Speed
The deal illustrates how China is now seen as the leader in EV design.
VW has spent a decade pushing what it calls a Modular Electric Drive Matrix (MEB) platform, a “skateboard” design for all its EVs. Such designs have become common in the EV market. They put the battery, along with the engine, drive train, and electronics, near the height of the wheels.
According to VW, the new platform is “exclusively for China.” It will power four cars selling for $25,000 and under. The XPeng deal will let it create the cars in just three years, one-third the time it took to perfect a platform like the MEB. The German company calls this development timeline “China speed.”
The new cars will be produced in Hefei, central China. Five hours west of Shanghai, Hefei has become the center of China’s highly competitive car industry.
XPeng announced its Smart Electric Platform Architecture (SEPA) 2.0 last year. The first car to be designed on the new platform is the G6.
XPeng sold 1,520 EVs in China during the week ending April 14. Compare that to 52,130 for market leader BYD (OTCMKTS:BYDDF) and 6,230 for Tesla (NASDAQ:TSLA).
XPEV Stock: What Happens Next?
The agreement demonstrates China’s dominance in EV design and manufacturing. The rest of the world has yet to grasp this. Surrender is apparently an option.
On the date of publication, Dana Blankenhorn did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
