Volkswagen exploring another EV partnership in China, this time for Jetta

Volkswagen looks to be forming a new EV partnership in China, separate from its collaboration with XPeng Motors. According to a new report, Volkswagen is negotiating with Hangzhou-based EV startup Leapmotor to outsource its technology for its Jetta brand.

The media report from Cailian claims Volkswagen’s Jetta brand is holding talks with Leapmotor to use its technology with a focus on “economical electric cars,” citing sources.

A person familiar with the matter told reporters that FAW (Volkswagen’s JV partner) has issued an internal document saying, “After Xaiopeng, Volkswagen’s Jetta brand is negotiating cooperation with Leapmotor.”

However, if a deal is reached, it’s expected to differ from the collaboration with XPeng Motors (Xaipeng).

VW will utilize XPeng’s Edward platform, used in the G9 and P7 models, to launch two new electric models. The automaker invested $700 million for a nearly 5% stake in the Chinese EV maker.

Audi and Chinese state-owned manufacturer SAIC also confirmed a partnership a week before to speed up EV development in the region.

Source: Volkswagen Group

Volkswagen negotiating another EV partnership in China

Volkswagen’s new EV partnership is expected to be similar to the Audi-SAIC collaboration rather than the XPeng deal. According to the report, “This time FAW-Volkswagen is very likely to ‘buy out’ a certain generation of zero running platform technology.”

Jetta was once a popular Volkswagen brand, but the automaker broke it off in 2019, classifying it as a sub-brand.

SAIC-VW ID.3 electric car in China (Source: SAIC-VW)

Since then, Jetta has struggled to gain traction as the market moves to EVs. According to the report, Jetta’s sales fell by 13.48% to 146,900 units last year.

Industry insiders said the next three years will be critical for automotive intelligence development. The report notes German cars have the advantage in hardware but are lacking in the software department.

SAIC-VW ID.3 electric car in China (Source: SAIC-VW)

In the new EV era, customers are gravitating toward software-defined intelligent vehicles rather than basing their purchases strictly on looks. The industry insiders claimed:

If the cooperation with Leapmotor comes true, Volkswagen will fully rely on the technical strength of Chinese car companies to make up for its shortcomings in the field of intelligent driving.

They continued, “Volkswagen urgently needs the new energy vehicle technology of Chinese car companies to reverse disadvantages of the market.”

Several Jetta and Leapmotor models, such as the VS5 and VS7, are in the same price range, making the collaboration more accessible.

Leapmotor revealed a new EV platform this week as CEO Zhu Jiangming said the company was nearing deals with two foreign automakers to license its technology.

Electrek’s Take

Volkswagen has lost ground in China, a market it once dominated. The German automaker was surpassed by China’s largest EV maker BYD in passenger car sales in the first three months of the year, extending its lead through July.

As the report notes, Volkswagen is not only lagging behind rivals like BYD and Tesla, but up-and-coming EV makers like NIO, XPeng, and Li Auto are also gaining market share, in many cases, in the same segments as VW.

If the deal with Leapmotor goes through, Volkswagen will rely heavily on Chinese tech to carry sales in its most important market.

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