XPeng in Talks With Volkswagen Over European Factory Acquisition

According to the Financial Times, XPeng Motors is currently in talks with Volkswagen and other European automakers regarding potential factory acquisitions, as the company seeks a suitable localized manufacturing base in Europe.

Speaking at the FT “Future of the Car” summit, Elvis Cheng, XPeng’s Managing Director for Northeast Europe, said the company is communicating with Volkswagen to evaluate existing factory resources in Europe, as well as the feasibility of establishing future production facilities.

Over the past several years, traditional European automakers have continued facing pressure from the EV transition, high labor costs and slowing market demand.

Volkswagen previously stated that it plans to cut annual vehicle production capacity by around 750,000 units by 2030, while further reducing approximately 500,000 units of capacity in Europe. Some German plants are also facing potential closure or restructuring.

Volkswagen invested $700 million in XPeng back in 2023, acquiring roughly a 5% stake in the Chinese EV maker.

The two companies later launched joint development cooperation for the Chinese market, and in March this year, their jointly developed model, the Volkswagen ID. UNYX 08, officially entered mass production.

Currently, XPeng models sold in Europe are mainly produced through contract manufacturing at Magna Steyr’s plant in Austria.

However, Cheng acknowledged that the facility’s production capacity is already nearing saturation.

For XPeng, continued growth in European sales would make it increasingly difficult to rely solely on contract manufacturing.

Localized production would not only help reduce logistics and tariff costs, but also support compliance with Europe’s increasingly stringent local supply chain policies.

Cheng said not all existing factories can meet XPeng’s future production requirements, as some Volkswagen facilities already operate with relatively outdated equipment.

As a result, XPeng is also evaluating the possibility of building its own factory in parallel.

In fact, Chinese automakers have recently accelerated efforts to ramp up capacity in Europe.

Just days ago, reports emerged that BYD was also in discussions with European automakers including Stellantis, seeking to utilize idle local factories for production.

Stellantis has already confirmed that some of its Spanish plants will manufacture electric vehicles for Leapmotor in the future.

XPeng’s overseas market demand has already exceeded expectations, particularly in France and Germany, where local sales have surpassed existing production capacity.

Data showed that XPeng’s overseas deliveries exceeded 45,000 vehicles in 2025, up 96% year-on-year. For 2026, the company has doubled its overseas sales target to 90,000 vehicles.