Shares of Chinese electric-vehicle maker Xpeng soared towards an 11-month high following an announcement that Volkswagen Group had purchased a 4.99% stake in the company. This strategic move aligns with Volkswagen’s “local electrification” strategy.
On Thursday morning, the Hong Kong-listed XPeng shares surged as much as 33%, putting them on track for their highest close since August. In U.S. trading overnight, American Depositary Receipts (ADRs) closed at $19.46, indicating a 27% increase.
According to Volkswagen, they will acquire a 4.99% stake in XPeng worth $700 million. This purchase of stock at $15 per ADS establishes a foundation for long-term strategic cooperation between the two companies. As part of the partnership, they have also agreed upon a technological framework for jointly developing two Volkswagen-branded electric vehicles (EVs) targeting the midsize segment of the Chinese market. These EVs are expected to be introduced in early 2026.
Volkswagen’s aim is to quickly seize opportunities in new customer and market segments, strategically leveraging the potential of China’s thriving e-mobility market.
Investor optimism surrounding the Chinese EV market was further fueled by this news, leading to respective increases of 11% and 3.3% in the shares of Xpeng’s competitors Nio and Li Auto in Hong Kong.
However, Citi’s analysts assign a high-risk rating to XPeng’s U.S.-listed shares, asserting that the company is currently overvalued. They have set a target price of $6.28 for Xpeng’s U.S.-listed shares.