Chinese automaker BYD aims to acquire a stake in the well-known "glasses" of Volkswagen in Dresden

Chinese automakers claim the “Glass Manufactory” in Dresden

In 2002 a factory site known as the “Glass Manufactory” was built in Dresden. For many years it was used by Volkswagen not only for car assembly but also as a sort of showroom. At the end of last year the plant was closed after the limited production run of models ended.

Now part of this area is being eyed by Chinese automakers, particularly BYD. According to CarNewsChina (linking to its own sources), BYD is negotiating with Volkswagen to purchase half of the complex for local assembly of electric vehicles for the European market. The remaining portion is planned by local authorities to be converted into an innovation hub, with investments of 50 million euros.

BYD in the German market

In March this year BYD sold 3,438 cars in Germany – a growth of 327 % compared to last year. The company is already building plants in Hungary and Turkey, and had previously considered assembling in Spain, where competing Leap Motor has its own facility. The criterion for choosing a country for localisation is the absence of high tariffs on imported Chinese cars. Spain did not support the introduction of such tariffs into the EU, making it attractive: low production costs and affordable renewable electricity.

Other Chinese brands are interested in European capacities

Volkswagen also attracts attention from MG (SAIC) and Xpeng. Xpeng already collaborates with VW: it holds 5 % equity in the company, and joint models for the Chinese market are being developed. SAIC owns a joint venture in China for producing Volkswagen-branded cars.

VW executives acknowledged this week that using idle European capacities with Chinese automakers would be a sensible solution. The group plans to cut global production volume from 12 to 9 million units per year.

Customs barriers and strategic benefits

While BYD imports all cars sold in the EU from China, they are subject to combined duties of 27 %. A plant under construction in Turkey will allow the company to reduce part of these tariffs on supplies to the European market. Having production in Germany for BYD is more symbolic than economic: being present as a car manufacturer in the country matters more than actual profit from sales.