Chinese electric vehicle maker Xpeng Inc (NYSE: XPEV, HK: 9868) saw its shares rise sharply in Hong Kong trade on Wednesday following the announcement of a strategic cooperation with tech giant Huawei.

Xpeng's Hong Kong shares surged as high as HK$80.45, before settling up 2.9% at HK$79.10 by midday, outperforming the Hang Seng index's modest 0.8% gain. This marks a strong performance for Xpeng, which has rallied 76% year-to-date in 2025, driven by robust deliveries and earnings that have beaten market expectations.

Strategic Tech Partnership

Under the new agreement, Xpeng will incorporate Huawei's heads-up display (HUD) technology into its vehicles. This move aims to enhance in-car user experience and strengthen Xpeng's competitive position in the fiercely contested Chinese electric vehicle market.

Earlier this year, Xpeng had hinted at seeking collaboration with Huawei to gain a technological edge. The partnership aligns with a broader trend among Chinese EV makers who are aggressively pursuing innovations such as smart HUDs, assisted driving features, and performance enhancements to differentiate themselves.

Market Context and Outlook

With strong local demand, Chinese EV manufacturers are fiercely competing for market share through price cuts and technology add-ons. Xpeng's strategy includes the launch of new models, including a mass-market car introduced in 2024 and an updated flagship X9 released in April.

This positions Xpeng as a rising competitor alongside established players like Tesla (NASDAQ: TSLA) and BYD (SZ: 002594).

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