Volkswagen and Chinese EV OEM, Xpeng, have entered into a framework agreement over technical collaboration on Electrical/Electronic architecture (E/E architecture). The E/E architecture will be incorporated into Volkswagen’s EV platform specifically designed for the Chinese market, known as the China Main Platform (CMP). The foundation of this agreement dates back to an initial collaboration in July 2023.

What is E/E architecture and what will it be used for?

E/E architecture refers to the design and layout of electronic systems within a vehicle, determining how components interact and are interconnected to manage various functions within a vehicle, such as drive unit control, safety systems, or driver assistance features. As vehicles become increasingly smart, an up-to-date E/E architecture is crucial to the operation of them.

Xpeng will provide its proprietary E/E architecture to VW, stating “it allows software including ADAS (advanced driving assistance systems) and Connectivity OS to decouple from the underlying hardware and vehicle platforms, achieving fast iteration of software across platforms.”

VW plans to release four entry level vehicles using its CMP as an internal project in China. However, in addition to this, Xpeng and VW will release two jointly developed mid-range vehicles in 2026 for the Chinese market using Xpeng’s E/E architecture.

Previous agreements

Collaboration between VW and Xpeng began in the summer of 2023, when the VW group invested USD700 million in Xpeng, giving it a 5% stake in the company. As part of this investment, the pair agreed to jointly develop two EVs for the Chinese market for release in 2026. In February 2024, the pair deepened their relationship by finalising the framework agreement and announcing the plan for a joint platform.

Rho’s Evaluation

VW’s collaboration aligns with other non-China OEM strategies aimed at addressing issues of slow market penetration in China for VW, as EV market share for non-China OEMs has not reflected their historical ICE market shares. Increasingly, OEMs are pairing up with Chinese players to help gain traction in the world’s largest EV economy. Along with VW and Xpeng, Audi has partnered with SAIC and FAW, while Stellantis has teamed up with Leapmotor, to increase its Chinese EV footprints.

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Image credit: Xpeng

Source: Xpeng