Chinese electric vehicle manufacturer Xpeng Inc. has marked a major milestone in its global expansion by opening its first European production line.
The move comes through a partnership with Austrian contract manufacturer Magna Steyr, a company known for its long history of assembling vehicles for international automakers.
The collaboration enables Xpeng to roll out its G6 and G9 sport utility vehicles from Magna’s Graz plant in southern Austria, with the first batch already completed.
This development underlines a shift in strategy by Chinese EV makers, who are looking to sidestep tariffs and broaden their customer base in key overseas markets.
European production base to offset tariffs
The European Union introduced tariffs on Chinese EV imports in 2024, ranging between 20.7% for cooperating automakers and up to 35.3% for others.
By localising production in Austria, Xpeng gains an important cost advantage in the region, protecting its vehicles from these additional charges.
The decision also highlights how Chinese EV manufacturers are adapting to growing trade barriers while still seeking to capitalise on strong European demand for clean transport solutions.
The Austrian venture follows Xpeng’s decision to begin assembly operations in Indonesia in July.
This dual strategy of Southeast Asian and European manufacturing allows the company to hedge against policy risks while ensuring smoother access to both established and emerging EV markets.
Expanding global operations alongside R&D in Munich
In addition to manufacturing, Xpeng has been building out its European footprint through research and development.
Earlier this month, the company’s Munich R&D centre was part of the IAA Mobility show, hosting more than a dozen Chinese automakers.
The facility plays a key role in designing models tailored to European preferences, including electric sedans planned for production at Magna’s Graz plant.
This European R&D presence ensures that Xpeng’s vehicles are not just assembled locally but are also developed with the regional market in mind.
The Munich centre gives the company an edge in creating designs that meet European standards and expectations, strengthening its competitive positioning.
Sales surge amid domestic pressures
Xpeng’s international expansion is happening alongside strong sales growth at home.
The company delivered 271,615 EVs in the first eight months of 2025, three times more than the same period in 2024.
Its American depositary receipts have risen about 77% since January, reflecting investor confidence in its scaling operations.
The rapid growth also comes against the backdrop of challenges in China’s domestic EV market, where overcapacity and a prolonged price war have been squeezing margins.
By establishing overseas bases, Xpeng can reduce reliance on its home market and seek better profitability in regions with higher average selling prices.
Quality concerns following recall
While Xpeng has expanded rapidly, it has also faced setbacks. Late last week, the company recalled most of its P7+ models due to a steering issue.
The recall highlights the importance of quality control as the company pushes into new markets, where safety and reliability standards remain under intense scrutiny.
The incident serves as a reminder of the difficulties EV manufacturers face as they balance growth with the need to maintain robust product quality.
For Xpeng, ensuring that its vehicles meet stringent European safety regulations will be vital to sustaining momentum in its overseas push.
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