Volkswagen Takeover Talk by BYD Highlights Europe's Auto Industry Strain

The suggestion that Chinese electric vehicle giant BYD could one day acquire Volkswagen is not based on any formal proposal or negotiation, but its appearance in public discourse reveals the depth of anxiety gripping the European automotive sector. Moritz Schularick, head of the Kiel Institute for the World Economy and a senior German economist, raised the possibility in an interview with the Süddeutsche Zeitung. When asked whether Volkswagen might go bankrupt, Schularick offered a stark alternative: "VW will probably be bought up by a Chinese car manufacturer. BYD, for example.

While Schularick's statement was speculative, it reflects a reality where Volkswagen's traditional business model"develop in Germany, produce in Europe, export worldwide" is under immense pressure. Volkswagen has not commented on the hypothetical takeover, dismissing it as baseless speculation. However, the company's restructuring plans, which reportedly include the potential loss of up to 100,000 jobs and the closure of factories, underscore the severity of the challenges it faces.

A Struggle on Multiple Fronts

Volkswagen is battling the Chinese auto industry on two fronts. In China, its largest market for years, sales have collapsed. In 2018, Volkswagen delivered approximately 4.21 million vehicles in China; by 2025, that figure had fallen to just 2.69 million. Meanwhile, Chinese manufacturers are aggressively expanding into Europe, directly competing with established brands on their home turf.

BYD has been a particularly potent force. In Germany alone, BYD's sales in the first half of 2026 grew by 318% compared to the previous year. Globally, BYD sold over four million vehicles in 2025, with 2.26 million being fully electric, surpassing Tesla as the world's leading EV manufacturer. BYD's ability to control its entire value chain, from batteries to electronic chips, gives it a significant cost advantage.

The pressure extends beyond Volkswagen. BYD's special adviser for Europe, Alfredo Altavilla, warned the industry, "Fighting that invasion is bloody useless". As Volkswagen prepares for what could be its biggest restructuring ever, he called the move the "first real wake-up call" for the entire European automotive sector.

Can BYD Really Buy VW? A Reality Check

Despite the dramatic headlines, a Chinese takeover of Volkswagen is, at present, extraordinarily unlikely. The company's ownership structure and the specific protections of the "Volkswagen Law" make such an acquisition nearly impossible.

• Controlled Shareholding: Less than 10% of Volkswagen shares are in free float. The majority is held by the Porsche SE holding company, controlled by the Porsche and Piëch families.

• The Volkswagen Law: This special law gives the state of Lower Saxony a blocking minority. For fundamental decisions, such as the sale of the company, a majority of over 80% is required, effectively giving the state veto power.

While the specific acquisition scenario is unrealistic, the discussion surrounding it serves as a powerful warning. The fact that a top economist can voice this possibility without being dismissed as absurd highlights the extent to which the structural strength of Europe's automotive industry is now being questioned.

A Strategic Pivot for Volkswagen

Volkswagen has dismissed the takeover talk but acknowledged its business model is broken. In response, the company is pursuing a strategy focused on regionalization, capacity adjustment, and complexity reduction. This includes empowering local markets to develop models tailored to regional tastes, shifting from its historic "one-size-fits-all" global approach. The company also aims to streamline its portfolio, potentially spinning off non-core assets as it did with its large-engine division to raise billions of euros.

The industry's strain is palpable and extends beyond Volkswagen to the broader European automotive supply chain and policy debates. While a direct takeover by BYD seems legally impossible, the discussion has served as a stark reminder that continued transformation is essential, not optional, for the survival of Europe's iconic automotive brands.