EV stocks took off in morning trading; XPeng Inc. surged nearly 35% and hit one-year high while NIO Inc. jumped over 8%.
Volkswagen AG plans to invest $700 million in Xpeng Inc. and jointly develop electric vehicles in China as the German automaker fights to halt a sales slide in its most important market.
VW will eventually hold a 4.99% stake in the Chinese company via a capital increase and is getting an observer board seat, it said Wednesday. Its Audi premium brand will deepen ties with VW’s long-term partner SAIC Motor Corp Ltd. to also bolster its EV lineup.
VW is trying to turn the tide in China, where Tesla Inc. and local champion BYD Co. have raced ahead because they’re better at churning out EVs with technology and software geared to local tastes. The company’s EV sales in China dipped in the first half in a market that grew 20%.
The deals, which bring VW’s count of carmaker partnerships in China to four, mark a turning point for the country’s manufacturers — from learning from foreign partners to helping them with their own technology and designs.
