- Volkswagen is trying to figure out how to best use its idled plants after 2027
- Chinese OEMs have their eyes on at least two soon-to-be-idled VW factories
- China’s presence in Germany could prove to be a huge political power play for an entry into the European market.
German automakers are looking to the sky right now. But it’s not drones over New Jersey that the Deutsch are worried about, it’s Chinese electric vehicle makers circling over their European plants like vultures, ready to sink their teeth into idled plants while the machinery is still warm.
See, China’s automakers are in a frenzy to expand right now. With fears that external growth could be extremely limited over the second half of the decade due to tariffs, OEMs are exploring what it would take to set up shop abroad. And what better way to do that than pick up shop and drop into an already purpose-built factory, especially when it’s from an automaker that’s in trouble and needs to offload some assets?
One company in China’s crosshairs is Volkswagen. The people’s car company is having a bit of a cost crisis right now. And as part of a larger corporate cost restructuring—or, as CEO Thomas Schafer calls it, the company’s “new realities”—VW announced that they would shutter “at least three” factories in Germany late last year. After pressure from labor unions, VW backed down on the outright closing of plants. Instead, the agreement reached just before Christmas was to idle only two plants through 2027 and instead seek alternative use for the selected factories in Dresden (where the ID 3 is built) and Osnabrueck (home of the T-Roc Cabrio). More than 2,500 workers are expected to be impacted.
This is where China’s EV titans come into play. According to a report from Reuters, these two sites are a golden ticket for any Chinese OEM with enough cash to wave around. A source intimately familiar with VW’s operations told Reuters that the company would be open to selling Osnabrueck to a Chinese buyer after it shuts the factory doors for the last time in 2027.
Stephan Soldanski, a union representative from Osnabrueck, said that the union workers currently employed at the plant would have nothing against producing a car for one of VW’s joint ventures from China. VW has partnerships with JAC (a manufacturing partner for NIO), FAW, and SAIC. However, the condition would be that the car must sport a Volkswagen logo—so perhaps a Chinese-sourced EV produced under the VW marque isn’t out of the question.
While China hasn’t officially said that it was looking at any of these sites, China’s foreign ministry spoke up to defend any possible interest from companies under its thumb. Here’s what a spokesperson for the ministry said:
China has introduced a series of opening-up measures to create new business opportunities for foreign companies. It is hoped that the German side will also uphold an open mind, [and] provide a fair, just and non-discriminatory business environment for Chinese firms to invest.
The acquisition of grounds on German soil would also mean a potential avenue to avoid tariffs. While Europe doesn’t have the largest barrier to entry (especially compared to the U.S. and Canada), Chinese OEMs can potentially avoid artificially inflating the cost of their cars by setting up shop directly in Europe.
Let’s be clear—this move isn’t just about scooping up one or two factories. It’s a power play by China’s booming electric car market. Some Chinese automakers have already planted their roots in smaller European countries, but a factory in Germany would be a game-changer. Volkswagen’s factories are a symbol of Germany’s industrial might, and for another automaker to swing in and rebuild the scraps into something churning out vehicles that the European Union fought so hard to keep out is a political statement on its own.
For Volkswagen, however, this could be a chance to offload surplus capacity with a valid excuse. It’s done with the plant, has no need for excess capacity, and will ultimately have to tighten its belt to stomach budget changes over the next few years. Germany and the rest of Europe know the truth, though.
If China is able to infiltrate the bloc’s auto capital, the gloves must come off.
