BRIEF: Magna Steyr to manufacture Xpeng EVs in Europe

Electric vehicle (EV) maker XPeng Inc. (XPEV.US; 9868.HK) announced on Monday that it will localize production in Europe through a contract manufacturing arrangement using an Austrian plant operated by Magna Steyr, according to financial media Caixin. The first batch of Xpeng G6 and G9 models has already rolled off the Austrian assembly line, with full-scale production expected to begin by the end of this month.

Magna Steyr is a global automotive components giant that also provides contract manufacturing services for several automakers, having built more than 4 million vehicles to date. Xpeng said it values Magna’s comprehensive expertise across parts, systems, and complete vehicles, as well as its strong supply chain network in Europe, which will accelerate its localized production efforts. The Austrian facility will also produce more Xpeng models in the future, including electric sedans and SUVs.

Contract manufacturing is not new to Xpeng. In 2017, the company partnered with Haima Automobile to produce its first model, the G3. Chairman He Xiaopeng has pointed out that the company started out using the contract manufacturing model in China, so extending this approach to Europe isn’t surprising.

Europe is the world’s third-largest auto market, with new vehicle registrations in the EU reaching 10.63 million last year, as battery-powered EV registrations surged 22% year-on-year. But the EU’s imposition of anti-subsidy tariffs of up to 35.3% on Chinese-made EVs starting at the end of October 2024 has made the need for localized production increasingly urgent. BYD (1211.HK; 002594.SZ), Leapmotor (9863.HK) and GAC Group (2238.HK; 601238.SH) have also announced plans for European plants or contract manufacturing, joining Xpeng in vying for market share.

Xpeng’s stock closed up 1.8% at HK$84.80 on Tuesday in Hong Kong, and is up 81.43% year-to-date.

By Lee Shih Ta

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