Xpeng Starts EV Production in Austria Boosting Europe Expansion

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Photo:Reuters

Chinese electric carmaker Xpeng, which is partly owned by Volkswagen, has started producing its electric vehicles in Europe for the first time. The company has teamed up with a contract manufacturer in Austria called Magna Steyr to assemble its G6 and G9 SUVs at their plant in Graz. This marks a major step in Xpeng’s plans to expand globally.

By making cars in Austria, Xpeng will avoid high import taxes on Chinese-made electric vehicles in the European Union, which are currently 30.7%. This move also helps Xpeng compete better in one of the world’s biggest car markets. The company said that over time, it plans to produce more models at the Austrian plant, gradually increasing the use of local parts and resources.

Xpeng is not alone in this strategy. More Chinese carmakers and auto suppliers are looking to set up production facilities in Europe. They are banking on their advanced electric vehicle technologies to gain a bigger share of the European market and boost profits.

Other Chinese carmakers who have already built plants in Europe include BYD and Chery Automobile. BYD has factories in Turkey and Hungary, while Chery operates a plant in Spain. Last week, a top BYD executive shared that the company is in talks with dozens of European component suppliers to create a strong local supply chain to support its expansion in the region.

Meanwhile, the world’s largest EV battery manufacturer, Contemporary Amperex Technology (CATL), is also making big moves in Europe. The company is set to start operations at its €7.3 billion factory in Debrecen, Hungary, by the end of this year. The factory has enough capacity to produce batteries for around 2 million electric cars, each capable of traveling up to 500 kilometers on a single charge.

Xpeng also has a partnership with Volkswagen in China. Earlier this year, they signed a deal to co-develop two mid-sized electric cars for the Chinese market by 2026. These cars will carry the Volkswagen brand but will use Xpeng’s technology and share parts and components. Volkswagen owns 5% of Xpeng after investing $700 million in 2023.

Chinese carmakers are leading in electric vehicle technology thanks to strong government support and a domestic market ready to adopt new innovations. In 2024, electric and plug-in hybrid cars sold in China made up more than 60% of the global total. Xpeng, in particular, is known for its advanced self-driving technology, which could compete with Tesla’s Full Self-Driving software.

With this expansion into Austria, Xpeng aims to become a major player in Europe’s fast-growing electric vehicle market. By assembling cars locally, it avoids hefty import duties, creates jobs, and strengthens its presence in one of the world’s most competitive automotive regions. Experts predict that more Chinese automakers will follow this strategy, setting up production facilities and supply chains in Europe to grow their business and take advantage of the continent’s growing demand for electric vehicles.

This move shows how Chinese companies are not just focusing on domestic growth but are actively seeking global expansion. Europe, with its strict environmental policies and increasing demand for electric vehicles, represents a key market for these companies. Xpeng’s entry through Austrian production could pave the way for other Chinese EV manufacturers to follow, creating more competition and innovation in the European electric car market.

Chinese carmakers in Europe