- Xpeng is evaluating European factory acquisition opportunities with Volkswagen and other automakers.
- Chinese EV manufacturers are increasingly leveraging unused European production capacity for expansion.
Xpeng is holding discussions with Volkswagen and several automotive manufacturers regarding the possible acquisition of a vehicle production facility in Europe. The move forms part of the Chinese electric vehicle manufacturer’s broader strategy to strengthen its overseas manufacturing footprint and accelerate international sales growth. The discussions were disclosed by Elvis Cheng, managing director for northeastern Europe at Xpeng, during the Financial Times Future of the Car summit. The company is currently assessing production opportunities that could support rising European demand while reducing operational exposure to regional tariff pressures.
Xpeng presently manufactures its vehicles at the Magna Steyr facility in Austria, where production of the G6 and G9 electric models began in September 2025. The Austrian operation was established to help mitigate the impact of elevated European Union tariffs on Chinese-made EV imports. Cheng indicated that the existing contract manufacturing arrangement is approaching capacity limitations as Xpeng expands its European portfolio. The company also completed trial production activities for its upcoming 2026 P7+ electric sedan at the same Austrian plant earlier this year, highlighting the growing pressure on available manufacturing resources.
During the summit, Cheng stated that Xpeng is not limiting itself to acquiring existing facilities and could also evaluate the construction of a completely new European production site. He noted that some existing automotive factories may not fully meet the technical and manufacturing requirements needed for future electric vehicle programs. Cheng specifically remarked that certain Volkswagen plants appear relatively outdated for next-generation product integration, indicating that modernization capability and production flexibility are becoming important criteria in the company’s expansion planning.
The negotiations are taking place at a time when Volkswagen is dealing with weakening demand conditions and increasing competitive pressure across the European automotive market. The German automaker is currently executing a major restructuring initiative aimed at reducing production overcapacity and improving operational efficiency. According to reports, Volkswagen plans to lower annual manufacturing capacity by approximately 750,000 vehicles by 2030 while also targeting an additional reduction of around 500,000 units across underutilized European facilities.
Volkswagen chief executive Oliver Blume recently confirmed that the company is evaluating options that could allow Chinese automotive partners to utilize portions of its excess production capacity in Europe. The relationship between Xpeng and Volkswagen has already deepened significantly over recent years. In 2023, Volkswagen invested approximately $700 million to acquire nearly a 5% ownership stake in Xpeng, establishing a strategic partnership focused on electric vehicle technologies and market cooperation.
Xpeng’s overseas business expansion has continued to gain momentum during 2026. Company export volumes reached 6,006 vehicles in April, representing a year-on-year increase of 62.24% and a month-on-month rise of 27.65%. Between January and April, the company exported a total of 17,563 vehicles globally, reflecting annual growth of 55.19%. The rapid growth demonstrates the increasing international ambitions of Chinese EV manufacturers as they seek stronger positions in overseas markets.
As competition intensifies globally, several Chinese automakers are increasingly exploring partnerships and production-sharing arrangements with established European automotive groups. This trend is helping manufacturers reduce investment risks while utilizing existing industrial infrastructure more efficiently. The strategy also enables faster localization of vehicle production, allowing companies to improve delivery timelines and reduce tariff exposure across the European region.
European Automakers Exploring Capacity Partnerships
Other Chinese electric vehicle manufacturers are pursuing similar strategies in Europe. BYD executive vice president Stella Li stated during the same summit that the company is in discussions with Stellantis and additional European automakers regarding the possible takeover of underutilized manufacturing plants. The discussions are centered on improving production efficiency while supporting the expansion of EV operations throughout Europe.
Stellantis recently announced plans to deepen cooperation with Leapmotor within the European market. Under the proposed arrangement, new production lines are expected to be added at the Zaragoza facility in Spain for manufacturing an Opel electric SUV alongside the Leapmotor B10 model. The companies are also planning a transfer of ownership involving Stellantis’ Madrid Villaverde plant to Leapmotor International’s Spanish subsidiary, where additional Leapmotor models are expected to be produced in the future.
European EV Production Capacity Overview
| Company | Key Development | Location |
|---|---|---|
| Xpeng | Exploring factory acquisition and capacity expansion | Europe |
| Volkswagen | Reducing excess production capacity | Germany / Europe |
| BYD | Discussing takeover of underused factories | Europe |
| Stellantis & Leapmotor | Expanding EV production cooperation | Spain |
The growing collaboration between Chinese EV manufacturers and European automotive companies reflects a major structural shift within the global automotive industry. As legacy manufacturers address excess capacity and restructuring challenges, emerging EV companies are leveraging these opportunities to accelerate regional manufacturing expansion. The evolving partnerships could significantly reshape Europe’s electric vehicle production landscape over the coming years while intensifying competition among established and emerging automotive brands.
Frequently Asked Questions
Why is Xpeng exploring factory acquisitions in Europe?
Xpeng is seeking additional manufacturing capacity in Europe to support rising international electric vehicle demand and reduce exposure to European Union tariffs on imported Chinese EVs. The company’s existing production arrangement at Austria’s Magna Steyr plant is approaching capacity limitations as exports continue to grow rapidly. By acquiring or establishing production facilities within Europe, Xpeng can improve supply chain efficiency, shorten delivery timelines, localize manufacturing operations, and strengthen its long-term competitive position in the European electric vehicle market.
How are European automakers benefiting from partnerships with Chinese EV companies?
European automotive manufacturers are using partnerships with Chinese EV companies to better utilize underused production facilities and improve operational efficiency during a challenging market environment. Companies such as Volkswagen and Stellantis are facing excess manufacturing capacity due to weaker demand and increasing competition. Collaborations with Chinese EV brands provide opportunities to maintain factory utilization, share production infrastructure, support electric vehicle expansion, and reduce the financial burden associated with idle manufacturing assets across Europe.
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