Chinese EV maker Xpeng is in strategic early talks with Volkswagen and other manufacturers to acquire a European production site as it pushes beyond its Austrian contract with Magna Steyr. Managing director Elvis Cheng told the FT Future of the Car summit the company is scouting locations that could host its next‑generation models. VW has not commented.

VW invested $700 mn for a 5% stake in Xpeng last year, a deal that also ties the two firms to co‑develop electric vehicles in China. Facing weakening demand, Volkswagen plans to shed about 750,000 vehicle‑annual capacity and repurpose idle plants across Germany and the wider EU. Xpeng’s current line at Magna Steyr is already nearing its limit, prompting the search for newer, less‑aged facilities.

Both companies see the arrangement as a way to optimise surplus capacity while giving Xpeng a foothold in a market where European consumers increasingly demand locally produced EVs. If a deal materialises, Xpeng could accelerate its rollout of advanced models, including “flying” cars and humanoid robots slated for a 2025 European debut, firmly tightening competition for incumbent brands.