China Eyes Volkswagen's Dresden and Osnabrueck Factories for EV Production to Bypass EU Tariffs

Jan 16, 2025, 09:45 AM

Chinese officials and automakers are exploring the acquisition of German factories slated for closure, with a particular interest in Volkswagen's sites in Dresden and Osnabrueck, according to sources familiar with Chinese government thinking. This move is seen as an opportunity for China to gain a foothold in Germany's prestigious auto industry, potentially allowing Chinese electric vehicle (EV) manufacturers to bypass EU tariffs on cars imported from China. Volkswagen, facing a global economic slowdown and a challenging transition to green technologies, has agreed to wind down production at these locations, with Dresden's ID.3 plant closing in 2025 and Osnabrueck's T-Roc Cabrio plant in 2027. Volkswagen is open to selling the Osnabrueck factory to a Chinese buyer, although any such deal would require Beijing's approval due to its political sensitivity. The acquisition could fetch between 100 million euros and 300 million euros per factory, offering a cheaper alternative to closing the plants. This development comes amidst cooling relations between Germany and China, with the new German government's stance on China expected to influence investment decisions post the February election.