After recently adding the P7+ sedan to its European catalog, Xpeng has reinforced its commitment to the region with a new partnership. The Chinese automaker has teamed up with Magna Steyr, a manufacturing giant based in Graz, Austria. In an announcement shared on social media on September 15, the brand confirmed that the first European-made units of the G6 and G9 have already rolled off the production line.
The timing of this move is closely tied to policy shifts within the European Union. Starting in 2024, EVs manufactured in China were subjected to significant additional tariffs, prompting several automakers to reassess their logistics chains. For Xpeng, this partnership with Magna Steyr is a direct response to those economic and regulatory challenges.
Avoiding Punitive Import Tariffs Through Local Production
In 2024, the European Union implemented new tariffs on Chinese electric vehicles, adding a 20.7% penalty to the existing 10% customs duties. This made Chinese EVs significantly less competitive in European markets, especially when compared to locally manufactured alternatives.
By beginning production in Austria, Xpeng bypasses these levies altogether. The company’s partnership with Magna Steyr allows for complete vehicle assembly on European soil, which not only cuts costs but also enhances its image among European consumers. This shift is described by Numerama as Xpeng’s “first European production project,” indicating a deeper level of commitment beyond just exports.
Although this strategic pivot helps shield Xpeng from financial penalties, it also serves as a marketing advantage. Producing vehicles in Europe can help mitigate consumer skepticism about the origin and quality of Chinese vehicles, especially in a market increasingly focused on transparency and sustainability.
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Price Positioning Remains Unchanged for Now
Despite now manufacturing in Austria, Xpeng is not expected to lower the prices of its G6 and G9 SUVs. According to Numerama, the brand is more likely to maintain its current pricing structure while benefiting from improved profit margins due to the removal of import costs.
The G6, in its entry-level rear-wheel drive configuration, is currently priced at 46,990 euros, placing it just under France’s maximum threshold for EV incentive eligibility. The vehicle is widely seen as a direct competitor to the Tesla Model Y, which operates in the same price segment.
Still, Xpeng has not officially indicated any price changes, and the brand may choose to leverage its newfound margin to reinvest in marketing, service networks, or further expansion initiatives rather than pass savings onto consumers. As a result, the competitive edge lies more in operational flexibility than in lower sticker prices.
Eligibility for French Eco-Incentives Remains Uncertain
Producing in Europe brings Xpeng closer to accessing France’s updated incentive program for electric vehicles, formerly known as the bonus écologique and now structured under the CEE framework. While the G6 meets the price requirement, its eligibility still hinges on other technical factors.
As reported, vehicles must achieve a high enough environmental score and must be fully produced—not merely assembled—in Europe. In the case of Xpeng’s SUVs, the manufacturing process in Austria involves assembling imported kits shipped from China, a detail that may disqualify them from the CEE subsidy.
This distinction is more than just bureaucratic. Government incentives play a crucial role in consumer decision-making, especially in the EV market. The difference between being eligible or not could tip the scales in favor of or against Xpeng, particularly when placed side by side with rivals that do meet the requirements.
