VW, Xpeng team up to develop affordable EVs for China

Volkswagen (VW) unveiled a collaboration with Chinese electric carmaker Xpeng to develop a new electrical architecture specifically designed for the Chinese market, Reuters reported on Wednesday.

The China Electrical Architecture (CEA) aims to make Volkswagen’s electric vehicles (EVs) more affordable and competitive.

It will be used in locally-developed Volkswagen EVs starting in 2026. It promises a 40 per cent cost reduction compared to the company’s current MEB platform used in Europe.

This cost-cutting is achieved through a simplified structure with fewer control units and a central computer managing all electronic functions.

This approach mirrors the architecture popularized by Tesla, which reduces wiring and components to improve efficiency and lower manufacturing costs.

Volkswagen board member Ralf Brandstaetter emphasised that the CEA is a key step in developing intelligent connected vehicles specifically for the Chinese market, aligning with their In China, for China strategy.

This collaboration builds on a partnership established last year, where Volkswagen acquired a stake in Xpeng and committed to launching two co-developed EV models under the Volkswagen brand by 2026.

Volkswagen is struggling to regain market share lost to local Chinese EV makers like BYD.  Their market share in China dropped from 18 per cent in 2018 to just 14 per cent last year, due in part to declining sales of combustion engine vehicles.

By partnering with Xpeng and developing the CEA, Volkswagen hopes to offer more affordable and competitive EVs, ultimately regaining a foothold in the world’s largest electric vehicle market.