Volkswagen and Watch PowerXpeng Motors have inked a deal to develop a high-performance electrical/electronic architecture that will underpin upcoming China-made, VW-branded models starting 2026, the companies said on Wednesday. The agreement is an expansion of a partnership that kicked off last year with a focus on the development of two new VW models featuring Xpeng’s autonomous driving capabilities scheduled for launch in 2026 in China. The China Electrical Architecture (CEA) set-up will feature 30% fewer electronic control units than Volkswagen’s previous systems, allowing the German automaker to lower the cost for its China-developed platform by 40% compared to its German-developed MEB platform. Volkswagen and Xpeng also said in February that they will start sourcing vehicle components together to reduce costs. Xpeng’s shares rose 3.8% as of Wednesday’s market close. [Volkswagen announcement]
