Volkswagen and XPeng Expand Partnership to Accelerate Software Development Across All Vehicle Types.

Volkswagen and XPeng have expanded their partnership, deepening their E/E Architecture collaboration beyond electric vehicles to internal combustion engine and plug-in hybrid platforms in China. The move aims to accelerate Volkswagen's software-defined vehicle strategy and enable faster software iterations and over-the-air updates. The partnership is a milestone in their long-term strategic alliance and is expected to unlock economies of scale and boost product competitiveness.

Volkswagen and XPeng have announced an expansion of their strategic partnership, deepening their E/E Architecture collaboration to include internal combustion engine (ICE) and plug-in hybrid (PHEV) platforms in China. This move aims to accelerate Volkswagen's software-defined vehicle strategy, enabling faster software iterations, over-the-air updates, and shorter development cycles [1].

The partnership, which builds on their July 2024 master agreement, validates that the E/E Architecture, initially designed for electric vehicles, can be effectively applied across multiple powertrains. This cross-powertrain application unlocks economies of scale and boosts product competitiveness [1]. The collaboration is seen as a milestone in their long-term strategic alliance, with both companies emphasizing the importance of smart vehicle innovation and cost advantages in China's competitive auto market [1].

XPeng CEO Xiaopeng He and Volkswagen China CEO Ralf Brandstätter highlighted the significance of the deal, with He noting it reflects long-term strategic trust and commitment to innovation. Brandstätter emphasized the move's role in consolidating technological leadership in conventional vehicles and optimizing cost structures [2].

The expanded partnership underscores Volkswagen's "for China, in China" strategy, which involves beefing up local R&D and innovation capabilities. By 2027, the CEA platform, which centers on a high-performance central compute platform supporting advanced driver assistance systems, will be applied to gasoline and hybrid vehicles produced in China [2].

Looking ahead, Volkswagen Group (China) plans to accelerate its intelligent connected vehicle push from 2026, with locally developed models tailored for Chinese consumers expected to appear at the 2025 Shanghai Auto Show. By 2027, the group aims to list around 30 electrified models in China, and by 2030, around 30 pure battery electric vehicles will be available across its brands [2].

References:
[1] https://finance.yahoo.com/news/volkswagen-expands-xpeng-partnership-speed-100358835.html
[2] https://carnewschina.com/2025/08/16/volkswagen-group-and-xpeng-expand-strategic-e-e-architecture-partnership-to-gasoline-and-plug-in-hybrid-platforms/