Volkswagen is using Xpeng's autonomous driving tech in its China EVs

Volkswagen is teaming up with Xpeng to integrate the Chinese carmaker’s advanced autonomous driving solution XNGP into its upcoming electric vehicles for China.

The move marks a major milestone in Volkswagen’s efforts to localize its EV technology under its ‘in China for China’ strategy.

Starting in 2026, the German carmaker’s China-bound models will feature XNGP, which rivals Tesla’s Full Self-Driving (FSD) system in scope and ambition.

The first car to debut this collaboration will be a mid-size SUV jointly developed with Xpeng.

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How Volkswagen is using Chinese tech to stay ahead

According to sources speaking to CarNewsChina, Volkswagen is already testing Xpeng’s XNGP on its first co-developed EV, which is scheduled to enter mass production in 2026.

XNGP allows a car to handle city streets and highways with minimal driver input, using cameras and sensors to ‘see’ its surroundings, with no high-definition maps required.

Xpeng will also supply its own Turing AI computer chips to power the system inside Volkswagen cars, helping them process driving data faster and more efficiently.

If the rollout goes smoothly, Volkswagen plans to equip all of its China-made electric cars with the system in the coming years.

This collaboration builds on Volkswagen’s $760 million investment in Xpeng back in 2023, which also gave the German carmaker a small ownership stake in the Chinese EV brand.

The two companies are already working together on two mid-size SUVs set to launch in 2026.

These vehicles will be built on a new, shared platform designed to make the cars run smarter and be easier to update with new software, which is a crucial advantage in China’s fast-moving EV market.

Xpeng is the first Chinese carmaker to produce EVs locally in Europe

Volkswagen says this partnership will help it design cars that better match what Chinese buyers want, especially when it comes to in-car tech and driving assistance.

The company’s in-house software division, Cariad China, will now focus on integrating software from partners like Xpeng, instead of developing everything internally.

The move highlights just how competitive the Chinese EV market has become.

Local brands have quickly pulled ahead in areas like autonomous driving and smart features.

In fact, while Volkswagen is partnering with Xpeng to better tackle the Chinese market, the latter is doing the reverse, by being the first Chinese carmaker to produce EVs locally in Europe.

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