Which battery companies will benefit from Volkswagen joining forces with Xpeng Motors?

With the transformation of the automobile industry, the world is gradually entering the era of electrification. Currently, Chinese car companies and foreign traditional giants have "changed their offensive and defensive positions" on the road to electrification.

Recently, Volkswagen Group announced that it has reached a strategic cooperation with Xpeng Motors, a new Chinese car-making force. The two parties will jointly develop two models based on their respective core competitiveness and Xpeng Motors' G9 model platform, smart cockpit and high-end assisted driving system software. B-class electric vehicle model, sold in the Chinese market under the Volkswagen brand, the new model will be put into production in 2026. At the same time, Volkswagen Group will increase its investment in Xpeng Motors by approximately US$700 million, acquire approximately 4.99% of Xpeng Motors' equity, and will obtain an observer seat on Xpeng Motors' board of directors after the transaction is completed.

In addition, the two parties will also explore other potential strategic cooperation in multiple areas, including cooperation in future electric vehicle platforms, software technology and supply chain.

According to foreign media reports, Volkswagen's investment in Xpeng is not to "support" Xpeng with its own technology, but to learn technology from Xpeng; Volkswagen will pay technical service fees to Xpeng starting next year, subverting the past 40 years of Chinese car companies A model of paying technology licensing fees to foreign car companies.

As the world's leading car company, Volkswagen's "commitment" to cooperate with Xpeng Motors shows that China has become a global leader in the field of smart electric vehicles. Behind this is the multi-dimensional development of Chinese cars in smart software, power batteries, and car manufacturing. The result of shared empowerment.

Data shows that Volkswagen's total revenue in 2022 will be 279.2 billion euros, a year-on-year increase of 11.6%; net profit will be 22.5 billion euros, a year-on-year increase of 12.5%. Last year, Volkswagen's total global deliveries were 8.3 million vehicles, a year-on-year decrease of about 7%, of which 572,100 pure electric vehicles were delivered, accounting for only 7% of the total deliveries.

In the Chinese market, Volkswagen's pure electric performance is also not satisfactory. The actual delivery volume of the Volkswagen ID. family in 2022 is only 143,100 units, which is less than BYD's sales in one month and even less than the sales of some new Chinese car-making forces.

Judging from development trends, the penetration rate of electric vehicles in China and even the global market is rising rapidly. Data shows that in June this year, the domestic retail penetration rate of new energy vehicles has reached 35.1%, and electric vehicles are the mainstay. At the same time, the export of electric vehicles by many Chinese car companies, including BYD, NIO, Xpeng, Hozon, Chery, SAIC, and Great Wall, has soared and performed well in the global market. Relying on its excellent hardware and software capabilities in the field of electrification and riding on the wave of electrification, Chinese car brands are gradually going overseas.

Volkswagen, which has been stumbling on the road to electrification, is clearly unable to sit still. In March this year, the Volkswagen Group announced that it would invest 180 billion euros in battery production, digital business in China, and expansion of business in North America over the next five years. Among them, 68% of the funds will be invested in future fields related to digitalization and electrification.

At the same time, Volkswagen is also actively "asking questions" and cooperating with Chinese companies. Up to now, Volkswagen has established partnerships with many Chinese technology companies such as Horizon, Thunderbolt and Xpeng Motors.

In the field of power batteries, Volkswagen invested 1 billion euros to acquire 26.47% of the shares of Guoxuan Hi-Tech, becoming its largest shareholder.

This cooperation with Xpeng Motors will not only jointly develop new models based on Xpeng Motors' G9 model platform, but also explore potential strategic cooperation in future electric vehicle platforms and supply chains, which will undoubtedly benefit more Chinese battery companies. Especially battery companies that have entered Xpeng Motors' supply chain and become core suppliers.

Battery China has sorted out the information on Xpeng Motors’ main suppliers in the first half of this year for your understanding:

Source: Power Battery Application Branch

According to data from the Power Battery Application Branch, from January to June this year, the installed capacity of Xpeng Motors’ main battery suppliers was ranked in order by Yiwei Lithium Energy, Zhongxin Aviation, Sunwoda and CATL. As of now, there are four companies supplying Xpeng automotive batteries.

Among them, Yiwei Lithium Energy's installed capacity in the first half of the year was approximately 1,140.4MWh, accounting for 43%, ranking first; China New Aviation ranked second with 905.6MWh installed capacity, accounting for 34.1%, Sunwoda and Ningde Times ranked third and fourth respectively with 317.9MWh and 290MWh.

From the perspective of supporting models, the current core suppliers of Xpeng P7 are Yiwei Lithium Energy, China New Aviation, and CATL;

The main suppliers of Xpeng P5 are Yiwei Lithium Energy and China New Aviation;

The core suppliers of Xpeng G9 are Sunwoda and Yiwei Lithium Energy;

The core suppliers of Xpeng G3 are Yiwei Lithium Energy and CATL;

Xpeng G6 is currently exclusively supplied by China Airlines.

It is worth noting that previously, Honeycomb Energy announced that the battery modules it provided for the Xpeng P5 550km endurance version were offline in batches. The batteries were produced in Honeycomb Energy’s new AI smart factory in Jintan, Changzhou, and used Honeycomb Energy laminated batteries. Technology, combined with the China Nickel high-voltage safety system, has the characteristics of low internal resistance and high safety. This means that Honeycomb Energy has now entered the Xpeng Motors supply chain.

Source: Xpeng Motors (unit: vehicles)

In addition, according to statistics, Xpeng Motors' sales have achieved positive growth for five consecutive months. With the launch of its new cars and the positive feedback brought by Volkswagen's investment, I believe that Xpeng Motors' future market performance is still worth looking forward to. As its car sales increase, the installed capacity of its major battery suppliers will continue to rise.

On the one hand, Xpeng Motors' excellent performance in intelligent software, battery quality, and vehicle manufacturing has been recognized by the public; on the other hand, the strong alliance between Volkswagen and Xpeng Motors, especially the potential of both parties in the supply chain field in the future, The strategic cooperation will also lead to the in-depth integration of Xpeng Automobile's battery supply chain manufacturers and Volkswagen. In the future, it is not ruled out that some companies that have not yet entered Volkswagen's supply chain will have the opportunity to enter Volkswagen's battery supply system.

In fact, as far as the current battery suppliers of Xpeng Automobile are concerned, Yiwei Lithium Energy, CATL, Hive Energy, Sunwanda, and China New Aviation have all implemented large-scale production capacity overseas. The above-mentioned companies have achieved production capacity, technology and The export of products overseas will help global car companies transform into electrification. The "hand in hand" between Volkswagen and Xpeng will undoubtedly add more aura to the above-mentioned companies.