Xpeng in talks with Volkswagen to buy European factory
Chinese EV maker Xpeng is in talks with Volkswagen to purchase one of its European factories, according to new reports.
The news, first reported in the Financial Times, comes just days after Volkswagen CEO, Oliver Blume, said the company could bring its VW China-developed cars to Europe, or share factory capacity here with its Chinese partners.
Volkswagen China was founded in 1985, when the German carmaker went into a joint venture (JV) with Chinese automotive giant, SAIC. It wasn’t until 2022 that BYD overtook Volkswagen China as the biggest-selling car brand on the Chinese domestic market.
In February this year, VW China announced it had begun manufacturing EVs based on a software-defined platform co-devleoped with Xpeng, called the China Electric Architecture (CEA).
Volkswagen took a 4.99% share in the AI-focused manufacturer towards the end of 2023. The first model to ride on the CEA is the ID. Unyx 07 fastback.
Speaking at the FT’s ‘Future of the Car’ summit in London earlier this week, Xpeng’s managing director for northeastern Europe, Elvis Cheng, confirmed to reporters that the Guangzhou-based firm is in talks with VW to see whether “there is any possibility we can find a location here in Europe”.
Volkswagen is checking to see whether any existing sites can deal with the additional capacity that facility-sharing with its Chinese partner would bring about.
A Plan B would be for Xpeng to build its own European plant, as Cheng described some of VW’s plants as “a little bit old”. “We think not all the factories can satisfy the requirements of our latest or future product requirements,” he added.
Xpeng’s flirtation with opening a European factory is another signal of intent that Chinese EV makers are working to get around the European Union’s 35.5% trade import tariffs imposed on their cars. The tariffs were introduced to help boost European manufacturers’ competitiveness on the local market.
On a wider scale, it also shows that manufacturers from China are serious about building cars ‘in Europe, for Europe’. Earlier this week, BYD executive vice president, Stella Li, confirmed that the Chinese giant will launch a range of cars tailored towards European buyers’ tastes from 2026 to 2029, beginning with the plug-in hybrid Dolphin G next month.
