Xpeng eyes European factory as VW seeks to offload spare capacity

The Chinese EV maker is in talks with Volkswagen and other carmakers as its Austrian production line runs short of room and VW looks for new uses for underused plants

Chinese electric vehicle maker Xpeng is reportedly in talks with Volkswagen and other carmakers about buying a factory in Europe as it pushes to expand international sales.

The talks come as Xpeng’s existing European production line at Magna Steyr’s plant in Austria runs short of capacity, according to Elvis Cheng, the company’s managing director for north-eastern Europe.

Cheng told the Financial Times’ Future of the Car summit that Xpeng was discussing possible European sites with Volkswagen.

He said: “We are . . . discussing with [Volkswagen] to see if there is any possibility we can find a location here in Europe.”

Xpeng, often described as China’s answer to Tesla, already has close ties with Volkswagen. The German group invested $700m in 2023 for a 5 per cent stake in Xpeng under a deal that also involves the co-development of electric vehicles in China.

Volkswagen is reportedly looking for ways to use spare manufacturing capacity in Europe after weaker demand and rising competition forced it into a major restructuring programme. The group plans to reduce capacity by about 750,000 vehicles a year and cut tens of thousands of jobs in Germany by 2030. It is also seeking to cut a further 500,000 units of annual capacity across Europe, with a particular focus on underused factories in Germany.

An Xpeng spokesperson later said no formal decision had been made on the company’s European manufacturing plans.

Volkswagen has previously indicated that it is looking at alternative uses for its plants, including the possible production of VW vehicles currently made in China or allowing Chinese partners to use spare capacity. Oliver Blume, Volkswagen’s chief executive, said at the end of April that the group was considering whether “there are opportunities for our Chinese partners in Europe” to use some excess capacity.

Xpeng’s European push comes as Chinese EV makers seek a stronger foothold outside their home market and as competition intensifies in Europe’s electric car sector. The company is also developing flying cars and humanoid robots, which it wants to bring to Europe next year.

READ MORE: Opel turns to Chinese EV technology for new European-built SUV. The German carmaker’s new electric family SUV will use Leapmotor architecture and battery systems while being designed in Germany and built in Europe.

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_{Main image: The interior of an XPENG electric vehicle. The Chinese EV maker is reportedly in talks with Volkswagen and other carmakers about buying a factory in Europe as it seeks to expand international sales. Credit: XPENG.}