Currently reading: Volkswagen could build its Chinese saloons and SUVs in Europe

Chinese-market Tesla Model 3 rival and Touareg-sized SUV could fill capacity at VW's German plants

Volkswagen is studying plans to produce its Chinese-developed EVs at under-utilised German factories as part of a wider effort to increase production, safeguard jobs and make better use of manufacturing capacity.

The proposal, reportedly backed by the German state of Lower Saxony, Volkswagen's second-largest shareholder, comes as the company reshapes its domestic manufacturing operations in response to shrinking sales, falling profits and increasing competition in European markets from Chinese car makers.

Sources at its Wolfsburg headquarters say the leading candidates are EVs from Volkswagen's new Unyx line-up, including those developed in China by Volkswagen in partnership with Xpeng.

No production decision has been taken, although the programme is understood to form part of a broader review of how Volkswagen can make better use of excess capacity at its German plants.

If approved, the move would represent a landmark reversal in Volkswagen's operations. Rather than exporting German-developed vehicles to China, it would build Chinese-developed models in Germany for European markets.

The first of the potential candidates for German production is the ID Unyx 07, a rear-wheel-drive saloon that became Volkswagen's first production model to adopt the new China Electrical Architecture (CEA) platform. At 4881mm in length, it competes with the Tesla Model 3 in China.

Also claimed to be under consideration is the 4887mm-long ID Unyx 08 SUV (below), which one senior Volkswagen executive recently described to Autocar as pointing towards the role once occupied by the Touareg within the brand's global SUV line-up.

A third model, the upmarket ID Unyx 09, is planned to join Volkswagen’s Chinese line-up in October. Recently revealed in filings published by China's Ministry of Industry and Information Technology, the 5081mm-long luxury saloon is set to be sold in China with the choice of rear- or four-wheel-drive.

Like the 08, the 09 (below) uses a CATL-supplied lithium-iron-phosphate battery and Volkswagen's latest AI-based driver assistance technology, developed specifically for the Chinese market.

Volkswagen views the Unyx programme as central to rebuilding its competitiveness in China, where domestic manufacturers have rapidly gained market share in recent years.

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The proposal to build China-developed models in Germany comes as Volkswagen undertakes one of the biggest restructurings in its history. Its network of German factories is currently operating well below capacity, following weaker-than-expected demand for EVs in Europe, prompting its board to examine a range of measures aimed at increasing utilisation while reducing manufacturing costs.

The discussions also raise the prospect of a deeper partnership with Xpeng. If Volkswagen proceeds with German production of the Unyx family, it could ultimately provide the manufacturing framework for the Chinese EV firm to assemble its own cars alongside Volkswagen cars for sale in European markets.

European production of Xpeng's G6 and G9 SUVs is currently handled by contract manufacturer Magna Steyr at its factory in Graz, Austria. 

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