Asian Tech Press (July 27) -- Chinese electric car startup Xpeng Inc. announced late Wednesday that it has entered into a framework agreement for technical cooperation with German automaker Volkswagen AG.

As part of the long-term strategic partnership, Volkswagen (VW) contributed about $700 million to Xpeng, acquiring a 4.99% stake in the startup for a price of $15 per ADS.

In the initial phase of the partnership, the two companies will work together to develop two VW-branded mid-size electric vehicles for the Chinese market, according to a statement from Volkswagen.

According to VW, the models, built specifically for Chinese consumers, are expected to hit the market in early 2026.

As for the planned models, Xpeng and its new partner did not reveal many details.

However, Chinese media outlet Yicai reported on Thursday that the first model from Xpeng and Volkswagen will be developed based on the EV platform and software of the Xpeng G9, the Chinese startup's flagship electric SUV.

Talks between the two companies began in the fourth quarter of last year, the report said, citing sources familiar with the matter.

And in the partnership, Xpeng will contribute the complete vehicle platform, smart cockpit and intelligent driving system, while Volkswagen will provide world-leading engineering and supply chain capabilities.

Notably, Volkswagen Group China Technology Company (VCTC), which was set up by Volkswagen in the Chinese city of Hefei at the end of May, has been designated as Xpeng's development partner.

Volkswagen said the new development and procurement center is the group's largest development site outside of Wolfsburg, where in the future more than 2,000 development and procurement specialists will work on new intelligent, fully connected electric vehicles