XPeng starts European production, sidestepping new EU tariffs

Chinese automaker XPeng officially began producing its electric cars in Europe, in a clever move that will help the company to grow its presence while neatly avoiding costly new import duties. The first batch of the company's G6 and G9 electric SUVs has rolled off a production line in Graz, Austria - a big milestone in XPeng's global expansion plans.

But this is not a story of another Chinese automaker building a massive new factory from the ground up. Instead, the company has partnered with Magna Steyr, a subsidiary of the Canadian automotive giant Magna. XPeng is using Magna's existing, state-of-the-art facility in Graz, which is Magna's largest plant.

This allows XPeng to ramp up production quickly and efficiently without the massive upfront investment and time required to construct its own plant. The first G6 and G9 models are just the beginning, with plans to expand the Austrian production line to include more XPeng electric cars.

The announcement comes shortly after the European Commission finalized its decision to impose additional tariffs on electric vehicles imported from China. These new duties are placed on top of the existing 10% tariff and vary by manufacturer.

BYD is looking at an extra 17% and Tesla a 7.8% levy on its China-made cars; XPeng was hit with a huge 20.7% additional tariff. By making vehicles within the European Union, XPeng's Austrian-made electric cars are no longer subject to these steep import taxes, making them more competitively priced for European customers. At least that's the theory.

This European manufacturing hub is XPeng's second venture into overseas production, following the start of operations at a facility in Indonesia in July, in a clear strategy: build electric cars where you sell them. Brain Gu, XPeng's vice chairman and co-president, described the partnership with Magna as a key part of the company's long-term vision to strengthen its European operations and deepen its commitment to the market.

Magna Steyr has a long history of building vehicles for other major automakers. Its Graz plant is known for its high-quality production standards and its ability to handle complex manufacturing. Roland Prettner, the president of Magna Steyr, previously said that the company is ready to support clients like XPeng in meeting all local regulations, including strict emissions and production requirements.

But XPeng isn't the first EV brand to take advantage of Magna's European production base. Fisker tried that as well with the bold goal of not having its own factories at all and entrusting Magna entirely to the manufacturing process of its Ocean electric SUV. That EV was supposed to be followed by many more revolutionary vehicles, but we all know how that ended.

The introduction of locally produced XPeng EVs will definitely shake up the European electric car market. It gives consumers more choices and puts pressure on established European automakers. By manufacturing the G6 and G9 SUVs in Austria, XPeng can shorten delivery times, customize vehicles for local tastes, and offer a more attractive price point than if it were importing them from China. And that last bit is probably the most important - let's see if XPeng can deliver on that "competitive pricing" promise.

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