Chinese electric vehicle (EV) maker XPeng (XPEV) is holding discussions with Volkswagen (VWAGY) and other automakers to buy a factory in Europe as the company looks to boost its international growth, the Financial Times reported. The news comes as Chinese EV makers are seeing intense competition and price wars in the domestic market. There have been reports of Chinese auto giant BYD (BYDDF) holding talks with European automakers about underutilized factories.
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Interestingly, Volkswagen invested $700 million in XPeng in 2023 for a 5% stake under a deal that involves the co-development of EVs in China.
XPeng Looks to Purchase European Factory
At the Financial Times’ Future of the Car summit on Wednesday, Elvis Cheng, XPeng’s managing director of northeastern Europe, said that the company is in talks with Volkswagen to explore the possibility of finding a location in Europe. It is worth noting that XPeng builds its EVs in Europe at contract manufacturer Magna Steyr’s plant in Austria. However, Cheng said that this production line was approaching its capacity limit.
Furthermore, XPeng is also evaluating the idea of establishing a new European factory, as the company thinks that Volkswagen’s plants are a “little bit old” and might not meet the requirements of its latest or future products. Like American EV giant Tesla (TSLA), XPeng is also working on “flying” cars and humanoid robots. The company expects to start large-scale production of its humanoid robots in Q4 2026 and then test them in international markets.
Meanwhile, Volkswagen is cutting its capacity by about 750,000 vehicles per year as part of its massive restructuring plan. The company aims to further reduce its annual capacity in Europe by 500,000 units.
Is XPEV Stock a Buy, Sell, or Hold?
Currently, Wall Street has a Moderate Buy consensus rating on XPeng stock based on four Buys, three Holds, and one Sell. The average XPEV stock price target of $23.39 indicates 40.2% upside potential. XPEV stock has declined 18% year-to-date amid sales pressure and intense competition in China.
