In recent years, the Chinese electric vehicle (EV) market has emerged as a dominant force, witnessing a remarkable surge in growth. The country’s prowess in producing promising EV startups has caught the attention of global industry leaders, with Tesla (NASDAQ: TSLA) being one of the notable players investing heavily in the country.
As the world shifts toward sustainable transportation, China’s EV sector continues to shape the future of mobility, with more legacy carmakers foraying into the world’s biggest auto market.
On Wednesday, July 26, shares of Chinese EV maker Xpeng (NYSE: XPEV) exploded nearly 27% after the company struck a landmark deal with Volkswagen, Germany’s largest car manufacturer.
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XPEV stock price analysis
At the time of publication on July 27, Xpeng’s US-listed shares stood at $19.46, up 26.69% on the day. This impressive 1-day stock price surge propelled the company’s market valuation by more than $1.5 billion, from $15.30 billion to $16.88 billion.
Over the past week, the EV stock gained more than 32.6%, and nearly a whopping 90% on the monthly chart, driven by growth in the broader EV market, as well as Xpeng’s recent quarterly return to growth in terms of car deliveries, after over a year of declines.
Volkswagen invests $700 million in Xpeng
Xpeng’s latest stock price leap came after the carmaker agreed with Volkswagen to jointly build two new electric vehicles for the Chinese market. Under the terms of the deal, the German company will inject roughly $700 million into Xpeng, acquiring a 4.99% stake in the Guangzhou, China-based EV startup.
To be more specific, the two automakers will develop two mid-sized battery-electric models based on the tech platform that powers Xpeng’s crossover SUV, G9. Additionally, the new models will also feature Xpeng’s advanced driver-assist technology.
Expected to launch in 2026, the upcoming vehicles will be branded as Volkswagen’s and sold only in China.
Analysts’ comments
Wang Hanyang, a Chinese auto analyst at 86Research Ltd, said the VW-Xpeng deal may be “just the beginning of cooperation between Western carmakers and China EV startups.”
Future partnerships “will not be limited to the Chinese market but will extend to the global market, with the output of China’s advanced EV technology through joint ventures, collaborative research, and other means,” he added.
Meanwhile, Citigroup analysts believe that the deal also represents Volkswagen’s efforts to avoid a long-term market share decline in China, the largest auto market on the globe. The experts said that VW’s share in China’s fast-growing EV market dropped to 2.4% in the first half of 2023, from 3.5% in the same period last year.
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