Chinese automaker Xpeng is actively seeking a manufacturing facility in Europe, while Volkswagen is looking to scale down its factory count. Although this situation appears primed for a partnership, Xpeng’s managing director for north-eastern Europe, Elvis Cheng, pointed out a significant hurdle: the age of the plant on offer. “It’s a little bit, I would say, old,” Cheng remarked during a recent conference, highlighting a potential mismatch between expectations and offerings.
This candid assessment underscores a broader trend in the automotive industry, where China’s carmakers are gaining momentum while their European counterparts face challenges. Chinese car sales in Europe have surged, with imports contributing to 8.6% of the western European market in the first quarter of the year, nearly doubling from the previous year, according to automotive analyst Matthias Schmidt. Companies like BYD, Changan, Chery, Dongfeng, and Geely are not only increasing their market presence but also contemplating production within Europe. Some are eyeing the construction of their own factories, while others see potential in acquiring underutilized facilities from European manufacturers.
Several European carmakers see this as a chance to divest excess capacity. Nissan is in discussions with Chery about utilizing a portion of its Sunderland plant in northern England, following a previous sale of a Barcelona facility to the same company. Similarly, Ford is reportedly negotiating with Geely to sell part of its Valencia plant, and Stellantis has announced that its Spanish factories will produce vehicles for Leapmotor. The influx of Chinese capital offers a solution for European manufacturers grappling with decreased car sales, which have dropped from 15.3 million in 2019 to under 13 million expected by 2025, exacerbated by U.S. tariffs impacting exports.
Despite these opportunities, Volkswagen’s brand chief, Thomas Schäfer, indicated that finding buyers for some of its plants remains challenging. He dismissed rumors of a new owner for the Dresden factory, Germany’s first closure in 88 years, as “nonsense,” noting the absence of interested parties. Nonetheless, Xpeng’s Cheng suggested that a deal with Volkswagen could still materialize if a suitable European location is identified, though building a new facility is also under consideration.
European carmakers, however, are privately concerned about the rising influence of Chinese manufacturers. An executive from a major company acknowledged the credibility of Chinese producers, recognizing them as formidable competitors across all market segments, from mainstream to luxury vehicles. This sentiment reflects the shifting dynamics in the global car industry, as Chinese firms continue to expand their footprint in Europe.