Xpeng is discussing purchasing one of Volkswagen’s European factories as the Chinese electric vehicle manufacturer looks to expand its presence in Europe.
The talks between the companies were first reported by the Financial Times. The discussions come days after Volkswagen CEO Oliver Blume said the company might bring its China-developed cars to Europe or share factory capacity with Chinese partners.
Elvis Cheng, Xpeng’s managing director for northeastern Europe, confirmed the talks during the FT’s ‘Future of the Car’ summit in London this week.
“There is any possibility we can find a location here in Europe,” Cheng told reporters about the ongoing discussions.
Factory Partnership Details
Volkswagen is checking whether its existing sites can handle the extra capacity that facility-sharing would create. The German automaker is evaluating which factories could accommodate Xpeng’s production requirements.
Xpeng has a backup plan if the partnership doesn’t work out – building its own European plant.
Cheng described some of VW’s facilities as “a little bit old.” He added that “not all the factories can satisfy the requirements of our latest or future product requirements.”
Existing Partnership
The two companies already have a working relationship. Volkswagen took a 4.99% stake in the AI-focused manufacturer in late 2023, according to Volkswagen Group.
In February, VW China began manufacturing EVs using a platform co-developed with Xpeng called the China Electric Architecture (CEA). The first model using this platform is the ID. Unyx 07 fastback.
Volkswagen China was established in 1985 through a joint venture with Chinese automotive company SAIC. The partnership held strong market position until 2022, when BYD overtook Volkswagen China as the top-selling car brand in China’s domestic market.
Broader Chinese EV Strategy
Xpeng’s European factory discussions signal how Chinese EV makers are working around the European Union’s 35.5% import tariffs on their vehicles. The EU introduced these tariffs to help European manufacturers compete locally.
The move also shows Chinese manufacturers are committed to building cars “in Europe, for Europe.”
BYD executive vice president Stella Li confirmed this week that the Chinese company will launch vehicles designed for European buyers from 2026 to 2029. The rollout starts with the plug-in hybrid Dolphin G next month.
Chinese EV companies are increasingly looking at local production to avoid tariffs and better serve regional markets. This approach allows them to maintain competitive pricing while meeting local preferences and regulations.
