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Xpeng (XPEV) stock jumps 28% on news Volkswagen takes 5% stake in Chinese EV maker

VW has been lagging behind in the industry-wide transition to electric vehicles, but the company is putting money behind its words with this $700 million investment in Xpeng.

Asif Khan

July 26, 2023 5:20 PM

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Volkswagen announced a $700 million investment in Chinese EV maker Xpeng today. The newly created stake will net VW nearly 5% of Xpeng, and both companies have committed to working together to jointly develop two new VW-branded EVs made specifically for the Chinese market.

The two new VW EVs will be built on the same platform as the existing Xpeng G9 SUV. The Volkswagen press release states that these vehicles will be built "in China for China." The $700 million capital infusion comes at a great time for Xpeng, as shares have fallen quite a way from the $74.49/share all-time high set back in 2020. VW's purchase price of $15/share will net the company 4.99% of Xpeng, and sets the companies up for strategic cooperation going forward. Xpeng shares closed the day up over 28% on the news.

Xpeng CEO and Chairman He Xiaopeng provided this quote in the press release:

“The Volkswagen Group and XPENG each brings in highly complementary strengths into this long-term strategic partnership. We will share Smart EV technologies and world-class design and engineering capability with each other and learn from each other. Since the founding of XPENG, we have been developing full-stack technologies from EV platform to connectivity and ADAS software in house. We are excited about the opportunity to contribute our expertise to the strategic partnership and create value for XPENG and our shareholders.” 

Volkswagen has a checkered past when it comes to manufacturing energy efficient vehicles, so today's news is a clear attempt by the company to make a new concerted effort to grow its EV footprint in one of the largest vehicle markets on Earth. Only time will tell just how much VW has learned from its "dieselgate" sins of the past.

In other recent EV news, GM maintained its production target earlier this week. Tesla also reported some solid quarterly results last week. Keep it locked on Shacknews for all the EV news you can handle.

Asif Khan

CEO/EIC/EIEIO

Asif Khan is the CEO, EIC, and majority shareholder of Shacknews. He began his career in video game journalism as a freelancer in 2001 for Tendobox.com. Asif is a CPA and was formerly an investment adviser representative. After much success in his own personal investments, he retired from his day job in financial services and is currently focused on new private investments. His favorite PC game of all time is Duke Nukem 3D, and he is an unapologetic fan of most things Nintendo. Asif first frequented the Shack when it was sCary's Shugashack to find all things Quake. When he is not immersed in investments or gaming he is a purveyor of fine electronic music. Asif also has an irrational love of Cleveland sports.