Xpeng in Talks With VW to Buy a European Plant

China's Xpeng is in talks with Volkswagen and other automakers about buying a factory in Europe, according to a Financial Times report. Elvis Cheng, Xpeng's managing director for northeastern Europe, said the Hong Kong-listed EV maker is exploring sites in collaboration with Volkswagen. Options on the table include buying an existing plant or building a new one. Volkswagen declined to comment to Reuters on the FT report.

The Details

Volkswagen already holds a stake in Xpeng, the spine of an existing partnership between the two companies. According to the FT, the German group is open to sharing factory capacity in Europe with Chinese partners. CEO Oliver Blume has previously said he wants to bring cars developed in China to the European market, and the plant talks fit that line.

Xpeng's push into Europe runs into stricter rules on foreign investment from China, which apply across the bloc to deals involving sensitive industries. A factory acquisition or greenfield build with a German partner is one of the few structures that can move forward without triggering the tariff regime that the EU imposed on Chinese-made EVs.

Localisation, not export, is the new playbook

The story is bigger than one factory. Chinese EV makers spent the last cycle trying to export their way into Europe and ran straight into the EU's anti-subsidy duties on China-built electric cars. Building locally, ideally inside an existing plant footprint, is the workaround.

For Volkswagen, the calculation is different. Its own European plants are running below capacity, and Northvolt's collapse left a hole in the European EV supply chain. Selling or sharing a plant with a Chinese partner that already sits inside the VW orbit puts spare capacity to work and gives Wolfsburg a hedge inside its own home market. For Xpeng, it converts a minority shareholder into a manufacturing partner on the ground in Europe.

Sources: DealStreet Asia, Financial Times