The Volkswagen Group’s surprise announcement in July that it would invest in Xpeng is symptomatic of the shift in relationships between western car makers in China and their once junior Chinese partners.
When foreign firms first accepted China’s ruling that they must form joint ventures (JVs) with local companies in order to gain access to what’s now the world’s largest car market, the relationship was one of master and pupil. Increasingly, however, the roles have shifted as Chinese firms' speeds of vehicle development – especially on software and batteries – have outpaced those of their one-time superiors.
