XPeng, Inc. (XPEV  ) shares are trading higher on Wednesday. XPeng announced its entry into a long-term, strategic partnership with the Volkswagen Group.

What To Know:

The Volkswagen Group will purchase 4.99% of XPENG's outstanding shares at $15 per American depositary share, for a total consideration of approximately $700 million.

XPeng and the Volkswagen Group will jointly develop two B-class battery electric vehicles (BEV) for sale in China under the Volkswagen brand. These models will leverage XPeng's G9 platform and Connectivity and ADAS software, with production expected to commence in 2026.

The agreement states that the companies will explore additional potential strategic cooperation in several areas, including collaboration on future EV platforms, software technologies and supply chain solutions.

"The Volkswagen Group and XPeng each brings in highly complementary strengths into this long-term strategic partnership. We will share Smart EV technologies and world-class design and engineering capability with each other and learn from each other," said Mr. Xiaopeng He, CEO of XPeng. "Since the founding of XPeng, we have been developing full-stack technologies from EV platform to Connectivity and ADAS software in house. We are excited about the opportunity to contribute our expertise to the strategic partnership and create value for XPeng and our shareholders."

XPEV Price Action: According to data from Benzinga Pro, XPEV shares are trading 25.1% higher at $19.24 at the time of publication.