On October 12th, He Xiaopeng, the Chairman of XPeng Motors, posted on Weibo that he visited Volkswagen Group’s headquarters in Wolfsburg at the end of September.
“In the past few months, the progress of our jointly developed models have been accelerating. The technical teams from both sides are like a startup team, fully committed and moving forward at full speed. The strategic cooperation in the supply chain will bring us potential cost reduction benefits”, wrote He Xiaopeng.
On July 26th, 2023, Volkswagen announced an investment of approximately $700 million in XPeng, holding a 4.99% stake in the company. After the transaction is completed, Volkswagen will obtain a seat as an observer on XPeng‘s board of directors.
In the initial stage of cooperation, the two companies plan to jointly develop two electric vehicle models under the Volkswagen brand for China’s mid-size car market and aim to enter the market by 2026.
Speaking of the cooperation model, XPeng stated that Volkswagen will develop two B-level SUVs from hardware to software, based on XPeng G9 platform. XPeng will provide the platform and technology, while Volkswagen will handle engineering research and development, design, and manufacturing.
As He Xiaopeng once said, “Very few Chinese automakers have a fully self-developed company. We are one of them, so we can cooperate with Volkswagen. This is a high recognition of our technology. In the past, the market did not value our technology much. We have always believed that our technology has great value.” In He Xiaopeng’s vision, monetizing the technology has always been XPeng‘s goal and this time, the goal is achieved. As the industry enters the era of technological service revenue, 2024 marks an important turning point for the company’s strategy of monetizing its technology, which also greatly affects XPeng‘s valuation reference regarding technological services income.
“We focus on technology and platforms. Our investments are relatively light in terms of assets, as they are based on mass-produced components. The software aspect is also easily replicable, which results in high gross margins,” said XPeng Motors. However, when it comes to pricing hardware and software specifically, XPeng declined to disclose details, citing confidentiality agreements.
In addition to the planned introduction of new vehicle models, XPeng Motors also stated that they will launch “updated versions of current models” next year. “We anticipate that these new vehicle models will bring more favorable profit margins, which will help enhance our profitability and product portfolio.”