Chinese electric vehicle (EV) maker Xpeng is in discussions with Volkswagen (VW) and other carmakers over acquiring a production facility in Europe, as it seeks to strengthen its continental presence.
Elvis Cheng, the company’s managing director for northeastern Europe, confirmed the negotiations at the Financial Times’ (FT) Future of the Car summit.
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He said Xpeng is also weighing the option of constructing an entirely new plant in the region.
The move is driven by capacity limitations at Xpeng’s existing European manufacturing base, which currently relies on contract producer Magna Steyr’s plant in Austria, according to the FT.
VW holds a 5% stake in Xpeng, secured through a $700m investment in 2023 that also covered joint EV development in China.
“We are discussing with [VW] to see if there is any possibility we can find a location here in Europe,” Cheng was quoted as saying.
Investment Monitor has reached out to VW for comment.
The German automaker is currently undertaking a significant restructuring, with plans to cut around 750,000 units of annual production capacity and reduce its German workforce by 50,000 by 2030, along with a further 500,000-unit reduction across European sites.
Group chief executive Oliver Blume indicated at the end of April that the company was assessing whether “there are opportunities for our Chinese partners in Europe” to make use of surplus capacity.
VW’s first quarter operating profit fell 14.3%, with US tariffs and intensifying competition in China cited as factors, and the group acknowledged its existing cost-cutting measures were insufficient.
Beyond EVs, Xpeng is developing flying cars and humanoid robots, with launches planned for European markets next year.
The development follows similar moves elsewhere in the sector.
Earlier this week, both Stellantis and Ford indicated that partnerships with Chinese manufacturers and established rivals are increasingly essential given high costs and subdued demand across European car markets.
BYD was also reported to be in discussions with Stellantis and several other European carmakers about taking on idle manufacturing capacity across the continent.
