Volkswagen is exploring the possibility of sharing its excess production lines in Europe with Chinese electric vehicle (EV) makers, as the company faces a downturn in demand and increased competition, reported Financial Times (FT).

This strategic move could involve Chinese car manufacturers taking over idle production lines, particularly in Germany, where Volkswagen has recently agreed to scale back production capacity to avoid plant closures.

Audi, a division of Volkswagen, CEO Gernot Döllner said: “For sure, that is thinkable.

Such a move would “lower the entrance barrier of these competitors. I believe in free trade,” Döllner added.

Audi has already established a partnership with SAIC, the maker of MG, to produce EVs in China.

Döllner suggested that similar collaborations could be replicated in Europe, allowing Chinese brands to expand their presence in the region.

Meanwhile, Volkswagen CFO David Powels was cited by the publication as saying that the Chinese carmakers may take over the company's underused production lines in Germany.

Powels said: “We’re open for any discussion on any topic with any partner. In a dynamic world, you have to keep all options open.”

The move comes amid rapid shift of Europe's automotive industry towards EVs.

Volkswagen, which has historically seen China as its most profitable market, has witnessed its market share halved over the past five years because of lag in the battery vehicle segment.

In its home market of Europe, Volkswagen has been affected by a significant decline in car sales, with two million fewer cars sold last year compared to five years prior.

To address this, Volkswagen last month reached an agreement with workers to reduce production capacity across Germany, aiming to cut its annual capacity by approximately 730,000 cars from around 1.5 million by 2030.

The pandemic exacerbated excess capacity issues for Volkswagen, leading to the cancellation of night shifts and a reduction in production. The brand produced about 900,000 cars in Germany in 2024.

Now, Volkswagen's plants are tasked with reaching new productivity targets, and those that fall short may be repurposed, potentially being sold off.

Earlier this month, Reuters reported that Chinese investors and officials were looking to purchase German automotive factories that are on the brink of closure, with a particular focus on Volkswagen’s facilities.