Volkswagen plans to shut four German plants as it trims up to 100,000 jobs, while Stellantis cuts staff in Germany, Italy and Poland and eyes an exit from Paris. The squeeze reflects Chinese EV makers capturing market share in China and expanding rapidly abroad. European auto groups now face a stark choice between deeper retreat or partnering with rivals such as China’s Xpeng.

Xpeng, a premium EV brand led by billionaire He Xiaopeng, produced over 400,000 cars in Guangzhou last year and views Europe – its biggest export market – as the next growth frontier. The firm is courting a joint‑venture plant that could use capacity freed by Volkswagen’s 4.99% stake acquired in 2023. Spain, Hungary and Italy are already courting Chinese firms, from SAIC to BYD, to establish local assembly.

EU policymakers responded with a draft Industrial Accelerator Act that would cap foreign ownership in cleantech at 49%, force technology sharing and require predominantly European workforces. The proposal targets Chinese investors, whose stakes often exceed 50% in battery and EV projects. Critics argue the rules could raise costs and slow green‑tech rollout, while Beijing warns of discriminatory barriers. The outcome will dictate whether Xpeng and peers build factories or revert to exporting fully built cars.