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

XPeng is building its European business at a time when the Chinese car industry is entering a much tougher phase. The company is investing in local production, expanding its European operations and bringing more of its technology to the continent, while also pushing hard into other international markets. The reason has less to do with how many cars XPeng can sell today and more with where it wants to be when China’s EV market sorts out its winners and losers. Several Chinese carmakers that entered Europe with ambitious plans only a few years ago have disappeared, scaled back or changed direction, and XPeng seems determined not to follow them. Rather than waiting to see how the increasingly fierce competition at home plays out, it is building a business outside China that could give it another source of growth, revenue and, perhaps most importantly, a stronger position to survive whatever comes next.

XPeng Outside China	Figure
Europe sales, first half of 2026	Over 31,000 vehicles
Germany registrations, first 8 months of 2026	5,773, up 258% YoY
Germany dealer locations	About 20 in 2024, 50 by end of 2025, 110 targeted for 2026
Overseas share of deliveries, first half of 2026	19.0%, up from 9.5% a year earlier
EU countervailing duty on XPeng vehicles from China	20.7%, on top of the standard 10% tariff

How XPeng Is Approaching Europe

My read is that some Chinese brands still approach Europe primarily as an outlet for cars built for an increasingly crowded home market. XPeng is taking a different approach, and the L03 is a good example. The model premiered in Munich in July alongside its Chinese launch, making it the first XPeng model to debut in Europe and China simultaneously. The European version replaces the Chinese apps with a translated interface and Google Voice Assistant, while European prices start at around €35,000 in the main continental markets. That puts it below the Tesla Model Y in markets where pricing has been confirmed, part of a broader price squeeze across the segment that I’ve tracked in my piece on why EVs in Europe are getting cheaper.

Production tells an even bigger story. XPeng builds the G6 and G9 at Magna’s plant in Graz, Austria, with the P7+ entering pilot production and the G9L joining the European production programme. The company is moving from a single locally produced model toward a multi-model manufacturing footprint, and anything built in Graz avoids the China-specific countervailing duty that applies to imported cars. Several Chinese brands are moving production into Europe for similar reasons, and my piece on Chinese EV manufacturers producing in Europe maps out who builds what and where. XPeng does not own the Graz plant, since Magna builds its cars under contract, which is a lighter commitment than the factories BYD wants to own outright, a scramble I covered in my piece on Chinese carmakers buying up European car factories. That distinction matters because XPeng did not need to spend billions building a factory from scratch to establish European production, while still getting much of the strategic benefit of building locally.

Germany has become XPeng’s biggest market outside China, and the dealer network behind it has more than doubled since 2024, with many more locations planned. In Britain, XPeng initially entered through distributor International Motors and has now established its own national sales company, even though only around 1,800 G6s had been delivered there at the time. Taking direct control of a market that small only makes sense if you are planning for what it could look like in a few years. Add local research and development, testing in Munich and the plan to bring XPeng’s VLA driver assistance technology to European roads from 2027, and the picture becomes clearer. A dealer network, a national sales company, local production and a European technology operation all take years to build and cost real money to unwind, which is a much bigger commitment than shipping cars into a market and hoping something sticks.

How Other Chinese Brands Have Fared in Europe

Nio is the story I keep coming back to, and I went through the details in Nio Is Dead in Europe if you want the full version. The short version is that Nio brought a business model that had worked at home and underestimated how much of it would translate to Europe. Nio Houses, premium pricing, battery swapping and a relatively complex ownership proposition all had to be introduced to customers who were already cautious about a new Chinese brand. Its own vice president, Mark Zhou, later acknowledged fundamental miscalculations, including cars that were too large for some European markets and regulatory complexity the company had not fully anticipated.

GWM took a different route to a similar problem. It arrived at the 2021 Munich Motor Show with real fanfare, opened a European headquarters, hired around 100 people and launched two sub-brands, Ora for affordable EVs and Wey for premium SUVs. After weak sales, it pulled most of that structure apart, closing the Munich headquarters and moving control of the business back to China. Now GWM is coming back with a broader product line and a target of 13 European countries, and that is where the trust question starts. A brand that walks away from Europe after a weak start and later returns with a new strategy is asking buyers to believe the outcome will be different this time. What happens if the new models do not sell in the numbers GWM expects? Will it scale back again and leave owners with a thinner support network? That fear has precedent, because Aiways left European owners struggling for service support, and I covered that in my piece on which Chinese brands will stay if you want the background. A group the size of GWM can probably absorb a second failed attempt more easily than a smaller manufacturer could, but the owner with a car in the driveway has no such cushion.

The other side of this story looks very different. BYD, Geely and MG are all doing well in Europe, and all three sit inside groups considerably bigger than XPeng. BYD tripled its European sales to nearly 188,000 vehicles in 2025, while its first-half revenue was about €43.4 billion even after a 7% fall. Geely reported record first-half revenue of €21.8 billion and entered seven European markets within 45 days, while MG, whose parent SAIC passed two million global vehicle sales in a first half for the first time, sold more than 190,000 cars in Europe between January and June. A company with tens of billions in revenue can absorb a slow start in a new market and keep investing until the products, pricing and dealer network begin to work, which is exactly what BYD did here after a slower start, expanding its dealer coverage and adjusting its product line.

XPeng’s own numbers put it in a different category. Its interim results filing shows a net loss of about €395 million for the first half of 2026, alongside a cash position of roughly €5.1 billion as of the end of June, well down from around €6 billion six months earlier but still a real cushion. A failed European push would not sink the company, but it would hurt far more than a comparable setback would for BYD or Geely, whose revenues run many times higher. That gap in firepower is part of why XPeng’s willingness to keep investing in European production and dealers is worth watching closely.

What Is Pushing XPeng Abroad

So why spend this much on Europe while the company is still losing money? China’s passenger-car market has continued to contract through 2026, with domestic sales down by roughly 20 percent, after the country’s EV purchase-tax incentives were reduced and the industry remained caught in an aggressive price war. Chinese manufacturers are also facing an increasingly crowded domestic market, with more than 100 EV brands competing for customers and analysts expecting the number of meaningful survivors to shrink dramatically, a shakeout I mapped out in more detail in my article on China’s 100 plus EV brands. XPeng’s overseas share of deliveries doubling in a year suggests the company sees international markets as more than a side business.

The pressure is not unique to XPeng, and XPeng’s own numbers make that clear. Bloomberg reported this year that its shares had fallen 35 percent, and that the company is now targeting roughly half its sales from overseas within five years, up from around a fifth today, something I covered when XPeng briefly overtook BYD in weekly China orders on the strength of the L03 launch. Chinese automakers as a group are pushing much harder into overseas markets too, with forecasts pointing to around 10 million vehicle exports this year, up from 7.1 million in 2025. Bill Russo, CEO of Automobility, has argued that excess capacity and highly competitive Chinese supply chains are giving manufacturers a strong reason to look abroad, while SAIC president Jia Jianxu described the shift as moving from going out to walking in. That is a fair description of what XPeng is doing in Europe. Exporting cars is one thing, but building locally is another, and China’s carmakers spent years learning how to manufacture EVs at enormous scale and compete on price. The next phase is taking that manufacturing capability, supply chain knowledge and technology into other markets and putting down roots there, and XPeng is already moving into that second phase in Europe.

There are risks on the other side too. European governments are increasingly concerned about China’s industrial dominance, while Germany’s trade deficit with China reached 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 directly from Guangzhou, so XPeng’s decision to manufacture locally gives it some protection against a policy environment that could turn less friendly to Chinese imports.

Europe is also becoming a larger EV market in its own right. Battery-electric registrations across Europe rose 33.7% to 1.24 million vehicles in the first half of 2026, Reuters reported in July, citing E-Mobility Europe and New AutoMotive data, so XPeng is not simply looking for somewhere to move cars that cannot find buyers in China. It is positioning itself inside one of the world’s major EV markets while that market is still growing.

From Carmaker to Technology Supplier

The newest piece of the puzzle came recently, when Reuters reported that XPeng plans to offer its technology to foreign automakers beyond Volkswagen. The package includes its electrical and electronic architecture, cockpit systems, Turing AI chips and driver assistance software, with robotaxi and robotics technology also part of the broader portfolio. XPeng has even set up a commercialisation team to pursue these deals. Electrek framed the strategy as similar to the playbook Tesla tried with FSD without finding many takers, while Reuters reported that XPeng is already talking to interested parties. I’d bet the earliest customers are more likely to be other Chinese brands, emerging-market automakers and suppliers than major Western manufacturers, since a Western carmaker putting Chinese chips and driving software into its vehicles would face obvious data security and geopolitical questions.

Volkswagen shows how the model works in China. Volkswagen bought 4.99% of XPeng for about €640 million in 2023, and the ID.Unyx 08, the first car from the alliance, uses XPeng’s cockpit, driver assistance software and Turing chips. When I wrote about Volkswagen licensing XPeng’s XNGP driving software last year, I argued that outsourcing software could gradually weaken VW’s own technological edge. The flip side is that XPeng now has a customer paying for that technology. Services and other revenue carried a 75.1% gross margin in the second quarter, compared with 12.1% for vehicles, while Bernstein analyst Eunice Lee estimated that around €152 million of that services revenue came from Volkswagen. That is an analyst estimate rather than a figure XPeng has separately disclosed, but it shows why software and technology licensing could become a much bigger part of the company’s economics over time.

Robotics adds another layer to that strategy. XPeng’s own announcement confirms its robotics unit, Dogotix, raised over €830 million at a post money valuation above €5.8 billion, led by IDG Capital with Tencent and Alibaba as strategic investors, while its IRON humanoid robot has moved into production with commercial deliveries planned for 2027. Management has said it expects IRON’s hardware gross margin to exceed 50% at volume, compared with the 12.1% margin on vehicles today. Nothing has shipped at scale yet, so I’d treat that as a target rather than a forecast, but the direction is clear: XPeng does not see itself purely as a company that builds cars, and that makes its European technology investment more significant too. Europe is becoming not just a market where XPeng sells vehicles, but part of the environment where it tests, develops and commercialises technology it could eventually sell to other companies, which is a much deeper relationship than simply exporting cars from China.

Why I Think XPeng Will Stick Around

Which brings me back to XPeng. Suspicion of anything labelled Made in China has been reinforced by brands that arrived with a big announcement, sold a few hundred cars and later scaled back or disappeared, and buyers remember that. When you spend €35,000, €40,000 or more on a car from a name you barely know, the question that matters is whether the company will still be here when you need a warranty repair.

XPeng is answering that question through the structure it is building. It is producing cars in Austria, expanding its German dealer network, running its own sales operation in Britain, maintaining a technology and testing presence in Munich and bringing more models into European production, and it launched the L03 in Europe alongside China rather than treating the continent as an afterthought. None of that guarantees success because XPeng still loses money, its European sales remain small compared with the established players, and Europe is a difficult market even for companies with decades of history here. The technology and robotics businesses are still unproven too, and XPeng has plenty left to demonstrate to European customers.

Still, entering a market and actually building a business inside it are two different things, and XPeng is doing the second one. If I had to name one Chinese brand I expect to still be selling cars here 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 the only Chinese brand that has built all four here.

Featured Image: chinaEVhome.com