(Yicai) Feb. 29 -- Shares of Xpeng rose after the Chinese new energy vehicle startup announced it entered into a master agreement on platform and software strategic technical collaboration with German auto giant Volkswagen Group.

Xpeng [HKG: 9868] was trading up 3.2 percent at HKD36 (USD4.60) as of lunch break in Hong Kong today. The company's New York-listed stock [NYSE: XPEV] closed 6.9 percent down at USD8.73 yesterday.

The master agreement marks a significant milestone in the strategic partnership between Xpeng and Volkswagen, as they will accelerate the joint development of the two B-class battery electric vehicles the pair earlier pledged to co-build and pave the way for an extended and deeper strategic collaboration in the future, the Guangzhou-based firm announced today.

As part of the agreement, Xpeng and Volkswagen also entered into a joint sourcing program for the common auto parts and platform used by the pair, Xpeng added. By sharing the scale of both parties combined and leveraging Volkswagen's world-class supply chain, the program will aim to jointly reduce the cost of the platform, achieving significant synergies for the strategic partnership and competitiveness of the B-class battery EVs being jointly developed.

"The signing of the agreement represents another significant milestone we achieved together with our partner Volkswagen," said He Xiaopeng, chairman and chief executive officer of Xpeng. "There is no precedent of the strategic partnership between Volkswagen and Xpeng. However, the commitment by both companies and the trust built between our research and development teams over the past eight months have made the success of our project possible."

"The fast finalization of the agreement after the strategic partnership announcement last year already shows the great potential of this collaboration," noted Ralf Brandstätter, board member of Volkswagen for China. "The two teams are working closely together with a clear goal: combine the strengths of both parties to bring smart products onto the road for our customers."

Last July, Volkswagen invested USD700 million to buy a 5 percent stake in Xpeng. On that occasion, the two firms signed a framework agreement on strategic technical collaboration, which included the joint development of two B-class battery EV models, which are mid-sized sedans.

Editor: Futura Costaglione