One of Germany's foremost economists has floated the idea that BYD could eventually take over Volkswagen. This comes as Europe's biggest carmaker pushes through major restructuring to lower costs and streamline its operations.

The remarks emerged in an interview with German newspaper Sueddeutsche Zeitung. Historian Niall Ferguson cautioned that Europe has lagged in countering China's heavy backing of its electric vehicle sector.

"Without drastic shifts, I foresee Europeans driving Chinese cars on a huge scale very soon," Mr Ferguson stated.

In the same exchange, Moritz Schularick, head of the Kiel Institute for the World Economy, urged Europe to leverage market access. He proposed letting Chinese automakers sell cars only if they also manufacture them locally.

When questioned on Volkswagen's longer-term outlook, Mr Schularick offered a striking forecast.

"Volkswagen will likely be acquired by a Chinese automaker, such as BYD," he said.

No signs indicate that BYD has contacted Volkswagen or is actively seeking a purchase. Still, the remarks have sparked fresh discussion across Europe about the German firm's direction. It faces slowing sales in China, intense rivalry from local brands, and steep expenses tied to next-generation EVs and software.

Volkswagen is already executing one of its largest overhauls ever. The company is weighing cuts to tens of thousands of positions, plant closures, reduced output capacity, and divestment of non-essential assets.

In April, Porsche, long Volkswagen's top profit driver, revealed plans to offload its stake in Bugatti Rimac. Orders dropped 10 per cent while profit fell 93 per cent year-on-year. Porsche's share price has also more than halved since 2023.

Subsequent European reports suggest Volkswagen advisers are examining the sale or separation of additional brands, including Lamborghini and Ducati.

The automaker has also stepped back from fully developing certain core technologies internally after notable difficulties at its Cariad software unit.

Volkswagen has instead poured billions into alliances with US EV firm Rivian and Chinese maker Xpeng. These moves grant access to advanced software and electrical platforms while trimming development expenses and timelines.

Further reports indicate Volkswagen may extend vehicle platforms and technologies created for China to other markets. This could allow models developed with Xpeng to reach Europe.

Some analysts argue the restructuring could draw investors by simplifying the corporate setup and sharpening focus on flagship brands.

Despite Mr Schularick's comments, any BYD takeover stays entirely hypothetical.

A Chinese automaker buying one of Germany's largest industrial players would almost certainly trigger heavy political and regulatory review throughout Europe. It could also encounter major barriers in the United States, where curbs on Chinese connected vehicle tech are tightening.

BYD ranks among the world's biggest makers of plug-in hybrid and electric vehicles. It has grown swiftly across Europe, positioning it as one of the few firms with the financial heft to consider such a transaction.

At present, however, nothing shows either company is exploring a takeover.

Mr Schularick's observations instead underscore the dramatic shift in the auto sector. Chinese manufacturers are now seen not only as rivals to Europe's established players but as entities with the resources to reshape and acquire the globe's largest car brands.