Xpeng Is Building Its Future in Europe, and I Think It Will Stick Around

Of all the Chinese carmakers currently competing in the European market, the one I believe will still be making an impact five years from now is undoubtedly Xpeng. They aren’t the biggest, and they lost about €395 million in the first half of 2026, but they’ve invested in Europe in ways that would be hard to undo. Their cars are built in Austria, they run their own sales company in Britain, and their German dealer network has more than doubled since 2024. That’s a very different approach from Nio and GWM, who arrived with big launches but far less groundwork, and have both since scaled back.

The timing makes sense, too. China’s car market is shrinking and the price war there shows no sign of easing, so building a second home market abroad has become a kind of insurance for the brands that can afford it.

Sources: Xpeng shipment data compiled by eletric-vehicles.com, KBA (Germany), XPENG Motors Deutschland, European Commission. Last updated 30 September 2026.

Where Xpeng Builds and Sells Cars in Europe

The Xpeng L03 is the clearest sign of how differently Xpeng treats Europe. Plenty of Chinese brands still bring over cars that were developed for their home market and adapt them afterwards. The L03, a compact electric SUV, was launched in Munich on 16 July 2026, on the same day as in China, which made it the first Xpeng model to debut in both markets at once. For the European version, Xpeng swapped the Chinese apps for a translated interface and Google Voice Assistant. Prices start at around €35,000 in the main continental markets, which undercuts the Tesla Model Y in every European country with confirmed pricing, so it’s part of a wider trend of EV prices falling across Europe.

Production is where the commitment really shows. The Xpeng G6 and G9 SUVs are built in Graz, Austria, by Magna Steyr, a contract manufacturer best known for building the Mercedes G-Class. The Xpeng P7+ saloon has joined them there, and the larger Xpeng G9L SUV is next. Because these cars are built in the EU, they avoid the extra 20.7% tariff the EU charges on Xpeng cars imported from China. Xpeng doesn’t own the plant, which is a lighter commitment than the route BYD and other Chinese carmakers are taking by buying European car factories outright. In return, they got European production without spending billions on a factory of their own. They’re far from the only Chinese brand doing this, and the list of Chinese EV makers producing in Europe keeps getting longer.

Germany has become Xpeng’s biggest market outside China this year. They registered 5,773 cars there in the first eight months of 2026, up 258% on the same period last year according to KBA, Germany’s vehicle registration authority, and their dealer network grew from 20 locations in 2024 to 50 by the end of 2025, with up to 110 planned by the end of this year. In Britain, Xpeng started out through a distributor, International Motors, but they’ve since set up their own national sales company, even though only around 1,800 G6s had been delivered there at the time. You don’t take direct control of a market that small unless you’re planning for the next few years. Add a research and testing centre in Munich and plans to bring Xpeng’s VLA driver assistance system to European roads from 2027, and you have a set of commitments that take years to build and cost real money to unwind.

Closer to where I live, things work a little differently. When I checked Xpeng’s global website in late September, the Europe section listed 17 countries, and Croatia, Slovenia, Hungary, Romania and Bulgaria weren’t among them. Xpeng is on sale in all five, but through local importers with their own websites. In Croatia, Slovenia and Hungary, the rights belong to AutoWallis Caetano, a 50/50 joint venture between Hungary’s AutoWallis and Portugal’s Salvador Caetano Group, which signed the deal in May 2025 and added Romania in April 2026. In Zagreb, the G6, G9 and P7+ are sold by Auto Benussi. For buyers here, that means the importer matters almost as much as the carmaker when it comes to warranty and parts. AutoWallis is listed on the Budapest Stock Exchange and also works with other Chinese brands such as BYD and MG, so I’d look at the importer’s track record as closely as Xpeng’s.

Why Nio and GWM Struggled in Europe

Nio is the comparison I keep coming back to, mostly because I’m convinced Nio is dead in Europe. In short, Nio brought over a business model that worked at home in China and overestimated how much of it would work here. Nio Houses (their members’ lounges for owners), premium pricing and battery swapping all had to be explained to buyers who were already wary of a new Chinese brand. Their vice president, Mark Zhou, later admitted to fundamental miscalculations, including cars that were too large for some European markets and regulations the company hadn’t fully anticipated.

GWM, short for Great Wall Motor, arrived at the 2021 Munich Motor Show with a European headquarters, around 100 staff and two sub-brands, Ora for affordable EVs and Wey for premium SUVs. Sales were weak, the Munich office closed and control of the business went back to China. GWM is now returning with a wider range and a target of 13 European countries, and I’d like to know what will happen if those cars don’t sell either. Aiways, a smaller Chinese EV brand, has shown what a retreat means for owners, who were left struggling to get their cars serviced, and that’s the main reason I think buyers should look closely at which Chinese brands will actually stay. A group the size of GWM can probably absorb a second failed attempt, but the owner with one of their cars in the driveway can’t.

The Chinese brands doing well in Europe are in a very different position. BYD tripled their European sales to nearly 188,000 cars in 2025, and their first-half revenue this year was about €43.4 billion, even after a 7% fall. Geely reported record first-half revenue of €21.8 billion and launched in seven European markets within 45 days. MG sold more than 190,000 cars in Europe between January and June, while their parent company SAIC passed two million global sales in a first half for the first time. With that kind of revenue behind them, these groups can keep paying for dealers and price cuts until a market starts to work, which is exactly what BYD did after their own slow start here.

Xpeng doesn’t have that cushion. Their interim results filing shows a net loss of about €395 million for the first half of 2026, and cash of roughly €5.1 billion at the end of June, down from around €6 billion six months earlier. A failed European push wouldn’t sink the company, but it would hurt far more than a similar setback at BYD or Geely. That’s why I see Xpeng’s continued spending on factories and dealers here as a serious signal.

Why Xpeng Is Pushing Into Europe Now

Xpeng is spending enormous amounts of cash abroad while still making a loss, and the main reason is that their home market is getting harder. China’s passenger car market has kept shrinking through 2026, with domestic sales down by roughly 20% after the government cut purchase tax incentives for EVs, and the price war hasn’t let up. More than 100 EV brands are competing there, and analysts expect far fewer of them to survive. Against that background, Xpeng’s overseas share of deliveries doubling to 19.0% in a year looks like much more than a side project.

Bloomberg reported this year that Xpeng’s shares had fallen 35%, even though the L03 has sold well in China and for a short while put Xpeng ahead of BYD in weekly orders there. Xpeng is now targeting about half their sales from overseas within five years, up from around a fifth today. The whole industry is moving the same way, with Chinese car exports forecast at around 10 million this year, up from 7.1 million in 2025. Bill Russo, CEO of the consultancy Automobility, puts it down to spare factory capacity in China and very competitive Chinese supply chains, while SAIC president Jia Jianxu describes the shift as moving from “going out” to “walking in”. His phrase describes Xpeng well. Chinese carmakers spent years learning to build EVs at huge scale and low cost, and the next step is taking that know-how to other markets and settling in there.

Building cars locally also works as a hedge. European governments are growing more uneasy about China’s industrial dominance, and Germany’s trade deficit with China hit a record €89.3 billion in 2025. If Brussels tightens the rules further, a car built in Graz is far less exposed than one shipped from Guangzhou.

Europe is also a growing EV market in its own right. Battery-electric registrations rose 33.7% to 1.24 million in the first half of 2026, Reuters reported in July, citing E-Mobility Europe and New AutoMotive data. So while their home market shrinks, Xpeng is moving into one of the world’s biggest EV markets at a time when it’s still growing.

From Carmaker to Technology Supplier

Reuters reported recently that Xpeng plans to offer their technology to other carmakers beyond Volkswagen, and that they’ve set up a dedicated team to sell it. The package covers their electrical and electronic architecture, cockpit systems, Turing AI chips and driver assistance software, with robotaxi and robotics technology also part of the wider offer. Electrek compared the plan to Tesla’s attempt to license their Full Self-Driving software, which found few takers, although Reuters says Xpeng is already talking to interested companies. I’d put my money on the first customers being other Chinese brands, carmakers in emerging markets and suppliers rather than big Western manufacturers, because putting Chinese chips and driving software into a European car raises obvious questions about data security and politics.

In China, Volkswagen shows how this works. They bought 4.99% of Xpeng for about €640 million in 2023, and the Volkswagen ID.Unyx 08, the first car to come out of the partnership, uses Xpeng’s cockpit, driver assistance software and Turing chips. When Volkswagen started licensing Xpeng’s XNGP driving software last year, I argued that outsourcing software could slowly erode VW’s own technical edge. For Xpeng, though, it means a paying customer, and a high-margin one. Services and other revenue had a 75.1% gross margin in the second quarter of 2026, compared with 12.1% on cars, and Bernstein analyst Eunice Lee estimates that around €152 million of that services revenue came from Volkswagen. That’s an analyst’s estimate rather than a figure Xpeng has disclosed, but the gap in margins explains why licensing technology could become a much bigger part of the business.

Robotics takes the same idea a step further. Xpeng’s own announcement says their robotics unit, Dogotix, raised over €830 million at a valuation above €5.8 billion, led by IDG Capital with Tencent and Alibaba as strategic investors. Their humanoid robot, Iron, has moved into production, with commercial deliveries planned for 2027, and management expects hardware gross margins above 50% once volumes grow. Nothing has shipped at scale yet, so I’d treat that as a target rather than a forecast. Among the humanoid robots EV makers are now building, I’d count Iron as one of the most credible. Whatever happens with the robot, it’s obvious that Xpeng doesn’t see itself only as a carmaker, which makes their research and testing work in Munich more important than it might first appear.

Why I Think Xpeng Will Stick Around

There’s a fair case against my view. Xpeng is still losing money, their European sales are still a fraction of BYD’s and MG’s, and Europe has been hard even on carmakers with decades of history here. The technology and robotics businesses are unproven, and much of what I’ve described depends on partners Xpeng doesn’t control, Magna Steyr in Graz and Volkswagen in software. If their cash reserves keep shrinking at the first-half rate, the European budget will be one of the first things management looks at.

Even so, the question most buyers ask is simple. When you spend €35,000 or €40,000 on a car from a brand you barely know, you want the brand to still be around when you need a warranty repair. Brands that arrived with a big launch, sold a few hundred cars and then left have made that a reasonable fear. Xpeng’s answer has been to build things here instead of just announcing them, and launching the L03 in Europe on the same day as in China is part of that.

If I had to name one Chinese brand I expect to still be selling cars in Europe in five years, it would be Xpeng. A factory relationship, a dealer network, a national sales operation and a technology partnership are what real commitment looks like, and Xpeng is one of the few Chinese brands that have either built all four here or are well on the way to doing so.

Featured Image: Xpeng L03 (Credit: Xpeng)