Chinese automaker Xpeng is actively pursuing the establishment of a manufacturing plant in Europe, while Volkswagen is simultaneously seeking to reduce its factory count. Despite this seemingly ideal scenario for collaboration, Xpeng’s managing director for north-eastern Europe, Elvis Cheng, has expressed concerns about the age of the offered plant, describing it as “a little bit old.” This candid assessment, made during a recent conference, highlights the shifting dynamics within the global automotive industry, where European carmakers are retreating as Chinese companies advance.
The growing influence of Chinese carmakers in Europe is evident, as their vehicle sales have surged across the continent. In the first quarter of the year, Chinese cars accounted for 8.6% of the western European market, nearly doubling their share from the same period the previous year, according to automotive analyst Matthias Schmidt. Companies like BYD, Changan, Chery, Dongfeng, and Geely are not only exporting vehicles but also eyeing production facilities in Europe. While some are considering constructing their own factories, others see the potential in acquiring underutilized plants from European manufacturers, who are willing to sell to alleviate excess capacity.
European carmakers, grappling with declining sales from 15.3 million units in 2019 to under 13 million projected by 2025, along with challenges from US tariffs, are finding relief in Chinese investments. The sale of factory space to Chinese competitors circumvents the painful process of closing sites and laying off workers. For instance, Nissan is in discussions with Chery to share its manufacturing facility in Sunderland, and has already sold a plant in Barcelona to the Chinese company. Similarly, Ford is reportedly negotiating the sale of part of its Valencia plant to Geely, while Stellantis has announced plans for its Spanish plants to produce vehicles for Leapmotor.
Despite these opportunities, Volkswagen’s brand chief, Thomas Schäfer, acknowledges the challenges in finding buyers, dismissing rumors about potential new ownership of its Dresden plant as “nonsense.” While there is no immediate interest, Xpeng’s Cheng remains open to the possibility of a deal with Volkswagen if a suitable European location can be identified, though constructing a new factory remains an option.
Behind closed doors, European carmakers are expressing concern over the growing credibility of Chinese manufacturers, recognizing them as a formidable threat across all market segments, from mass-produced vehicles to luxury cars. As the balance of power shifts, the automotive landscape in Europe is poised for significant transformation, driven by the strategic moves of Chinese automakers.