Chinese automaker BYD is in discussions with Volkswagen to acquire part of the latter’s Transparent Factory in Dresden, according to sources. The proposed deal would see BYD investing in the site and using one half of the facility for electric vehicle production, while the remaining section is earmarked for an innovation hub run in cooperation with the state of Saxony and TU Dresden.
Establishing a manufacturing base in Germany could strengthen BYD’s brand image by offering a “Made in Germany” label. In March, BYD’s German sales rose 327% year over year to 3,438 units. The company had previously evaluated Spain for its second European factory due to its lower manufacturing costs, established infrastructure and clean-energy network. BYD is already developing plants in Hungary and Turkey.
Germany’s opposition to additional EU tariffs on China-made EVs is viewed favorably by Beijing. At the EU level, talks are underway to replace anti-subsidy tariffs with a minimum import price, but until a consensus is reached, member states have pursued individual strategies. Poland, which supported the levies, later lost production opportunities, while countries like Spain, which abstained, have attracted new projects.
Other Chinese brands, including MG and Xpeng, are also exploring the use of Volkswagen’s European facilities. Xpeng currently assembles vehicles with Magna Steyr in Austria, and MG has considered sites in Spain and Hungary. Volkswagen holds a stake in Xpeng and partners with SAIC’s MG in China.
Volkswagen closed vehicle assembly at the Dresden plant at the end of 2025. Originally opened in 2002 for premium models, the site has produced Phaeton, Bentley vehicles, the e-Golf and most recently the ID.3, with an annual output of around 6,000 units. Local authorities and VW Sachsen signed a letter of intent in late 2025 to convert half the plant into an innovation hub, with renovation costs estimated at roughly €50 million.
Volkswagen CEO Oliver Blume has noted that sharing underutilized capacity with external partners could be an effective way to balance production and reduce costs. A partnership in Dresden would give BYD a strategic foothold in Germany, Europe’s largest auto market.
Source: CarNewsChina
