(Yicai) April 17 -- Chinese electric vehicle startup Xpeng Motors and German auto giant Volkswagen Group will jointly develop an electrical/electronic architecture for the Chinese market, further deepening their collaboration.

The pair have inked a deal to develop and integrate Xpeng’s latest generation E/E architecture to Volkswagen's China Main Platform, using it in VW brand EVs made in the country from 2026, Xpeng said yesterday.

“The E/E architecture is core to Xpeng's vertically integrated full-stack software and hardware technologies,” the Guangzhou-based firm said. It allows software such as advanced driving assistance and in-car operating systems to decouple from the underlying hardware and vehicle platforms, achieving fast software iteration across platforms.

“The collaboration will allow our Smart EV products to be both technologically competitive and cost competitive,” said Xpeng founder and Chief Executive He Xiaopeng.

Shares of Xpeng [HKG: 9868] gained 3.4 percent to close at HKD29.20 (USD3.73) in Hong Kong today. Its New York-listed stock [NASDAQ: XPEV] ended up 3.8 percent at USD7.42 yesterday.

“With our 'In China, for China' strategy, we are strengthening the innovative strength of the Volkswagen Group in China,” Ralf Brandstätter, VW’s China business head, said in a separate press release yesterday.

“By expanding our partnership with Xpeng and consistently integrating into China's industrial ecosystem, we will align our products even more quickly to the requirements of Chinese customers,” Brandstätter said.

Volkswagen invested USD700 million for a 5 percent stake in Xpeng last July and said the pair would jointly produce two mid-size EVs in Hefei, the capital of China’s Anhui province, which will likely launch in 2026.

On April 11, Volkswagen said it would invest an additional EUR2.5 billion (USD2.7 billion) in its Hefei base to strengthen its research and development capabilities in China. Hefei, where VW has already invested EUR1 billion, is its largest R&D center after the one at its Wolfsburg headquarters.

Xpeng's auto deliveries jumped 17 percent to 141,601 units in 2023 from the year before, according to its latest financial report. Its net loss widened 14 percent to CNY10.4 billion (USD1.4 billion), while revenue rose 14 percent to CNY30.7 billion.

Editor: Martin Kadiev