On February 29th, Red Star Capital Bureau learned that Xiaopeng Motors (09868. HK/XPEV. US) has signed a platform and software strategic technology cooperation joint development agreement with Volkswagen Group (hereinafter referred to as the "Joint Development Agreement"). Both sides announced that they will jointly develop two intelligent connected vehicle models for the Chinese mid size car market, with the first product being an SUV model. Through joint development, the product launch cycle will be significantly reduced by over 30%, and the first two models have been confirmed to be launched in 2026.
As an important component of the joint development agreement, Xiaopeng Motors and Volkswagen have also entered into a joint procurement plan for shared components of both vehicle models and platforms, aiming to jointly reduce platform costs, fully leverage synergies, and enhance product competitiveness.
Volkswagen Holding Hands with Xiaopeng
The first two models will be launched in 2026
Xiaopeng Motors Chairman and CEO He Xiaopeng stated that the strategic cooperation model between Volkswagen Group and Xiaopeng Motors has no precedent in the automotive industry, and the signing of the joint development agreement marks another major milestone in the strategic cooperation between the two sides.
Volkswagen Group's Director of China, Bered, stated that China is the world's largest and fastest growing electric vehicle market, and speed is crucial for expanding into highly promising niche markets and gaining a leading advantage. Through cooperation with Xiaopeng Motors, Volkswagen will shorten the product development cycle, improve efficiency, and optimize cost structure. In a highly price sensitive market environment, this will significantly enhance the economic competitiveness of the product.
Red Star Capital Bureau has noticed that Volkswagen China has released a teaser image for its first SUV, with a silhouette similar to the Xiaopeng G9. It is understood that the research and development of Volkswagen brand B-class pure electric vehicle models jointly developed by both parties has completed important milestones.
In July 2023, Volkswagen Group announced that it would increase its capital by approximately $700 million (approximately RMB 5 billion) to acquire approximately 4.99% of Xiaopeng Motors at a price of $15 per ADS. After the transaction is completed, Volkswagen Group will receive an observer seat on the board of directors of Xiaopeng Motors. In addition, the newly established Volkswagen (China) Technology Co., Ltd. (VCTC) will become a partner for Xiaopeng Motors in the development field.
Both parties have reached a technical framework agreement, and at the same time, Volkswagen Group has signed a share purchase agreement for strategic minority equity investment in Xiaopeng Motors. In the initial stage of cooperation, both parties will target the mid size car market in China and jointly develop two electric models under the Volkswagen brand, which are expected to be launched in 2026.
In December 2023, Volkswagen Group completed the acquisition of 4.99% of the total issued and outstanding share capital of Xiaopeng Motors. The total purchase price is approximately 706 million US dollars, and the net proceeds after deducting related costs and expenses are approximately 705 million US dollars. Xiaopeng Motors plans to use this net amount for general company purposes, including meeting the company's operational capital needs.
Xiaopeng Motors has internal worries and external difficulties
Plan for 2024: Promote 30 models of vehicles and expand enrollment to 4000 people within 3 years
In the just past year of 2023, Xiaopeng Motors faced internal and external difficulties. In the first three quarters of 2023, Xiaopeng Automobile's net loss reached 3.89 billion yuan, with a gross profit margin of -6.1%.
2024 is the tenth year of Xiaopeng Motors. Looking ahead to 2024, He Xiaopeng bluntly stated in his commencement letter that 2024 is the first year for Chinese automotive brands to enter the "sea of blood" competition and also the first year for the knockout stage. "Xiaopeng Motors was fighting fiercely in the 'sea of blood' from the beginning."
He proposed that in 2024, the company should save money that should not be spent, spend more valuable money on people, research and development, and strategy, and have better profits in business. "The performance needs to double or more, the organization needs to supplement and complete all shortcomings, and the operation needs to start moving towards high-quality as the first step." Xiaopeng Automobile is expected to achieve a positive cycle in the fourth quarter of this year or earlier.
In terms of products, Xiaopeng Motors plans to introduce about 30 new or redesigned models within 3 years. This year, Xiaopeng will release its first car on platforms priced at 300000 yuan and 150000 yuan respectively. The former is the MPV model Xiaopeng X9 launched in January, while the latter is the A-level electric vehicle MONA jointly launched by Xiaopeng and Didi.
In terms of overseas markets, this year Xiaopeng Motors will lay out core markets in Europe, ASEAN, the Middle East, Latin America, Oceania and other regions, deepen the intelligent advantages of its products, and strengthen the localization and adaptation of its products. On February 22nd, Xiaopeng Motors announced its partnership with Ali&, a distributor group in the United Arab Emirates; Sons has established a strategic partnership and will begin selling Xiaopeng G6 and G9 in the UAE from the third quarter onwards.
In terms of research and development investment, Xiaopeng Motors will recruit about 4000 people in 2024, with a year-on-year R&D budget exceeding 40%. It is expected that the annual R&D investment in "AI technology with intelligent driving as the core" will be a total of 3.5 billion yuan.
Red Star News reporter Wu Danruo
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