Xpeng in Talks With Volkswagen About Acquiring European Factory

Xpeng is in talks with Volkswagen about buying one of its factories in Europe, according to people familiar with the matter. The discussions come as Chinese automakers seek to expand their manufacturing footprint in Europe amid growing trade tensions and tariffs on vehicles imported from China.

A factory acquisition or new build would allow Xpeng to produce vehicles locally for the European market. Xpeng has not yet made a final decision on either option. The talks with Volkswagen remain at an early stage and could still fall through, the people said.

Establishing production in Europe would represent a significant step for Xpeng, which currently manufactures vehicles in China. Local production could help the company avoid tariffs and better serve customers in the region. The company has seen rapid growth in its home market but faces increasing competition and regulatory hurdles abroad.

European expansion through manufacturing infrastructure is one avenue under consideration to support longer-term sales goals on the continent. Volkswagen has been restructuring its own European operations in recent years as it shifts toward electric vehicles and faces competition from both legacy automakers and new entrants from China.