AsianFin--Shares of Xpeng Motors surged after the Chinese electric vehicle manufacturer announced a strategic agreement with Volkswagen Group to co-develop an advanced electrical/electronic (E/E) architecture for Volkswagen's China Main Platform and Modular Electric Drive Matrix.

Xpeng's stock climbed 3.9% on Monday, closing at HKD33.65 (US$4.31) per share on the Hong Kong Stock Exchange. The benchmark Hang Seng Index also saw an increase, gaining 1.3%.

Xpeng and Volkswagen will further explore opportunities for collaboration and aim to implement their jointly developed E/E architecture in additional vehicles, Xpeng revealed today. The companies have established co-development project teams in Guangzhou and Hefei, with plans for the first model featuring this new system to enter mass production within the next 24 months.

Volkswagen previously disclosed that its subsidiary, VW China Technology, along with Cariad China, its software unit, and Xpeng, are jointly working on the China Electrical Architecture, a new E/E architecture.