Bypass of EU criminal offenses: electric vehicle manufacturer Xpeng and GAC shortly before production agreement with Magna Steyr

Published on: March 24, 2025 / update from: March 24, 2025 - Author: Konrad Wolfenstein

Electric vehicle manufacturer Xpeng: Progressive electromobility for a sustainable future - Image: Xpert.digital

Xpeng, GAC and Magna Steyr: A partnership with potential

EU criminal offenses in sight: China's electric car offensive in Europe

The Chinese electric vehicle manufacturers Xpeng and GAC are apparently about to deal with the recently introduced EU criminal offenses on Chinese electric cars shortly before completing a significant agreement with the Austrian contract-ready Magna Steyr, which would enable them. This strategic partnership could have far -reaching effects on the European electric vehicle market and shows how Chinese manufacturers find innovative ways to advance their expansion plans in Europe despite trading policy hurdles.

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The planned cooperation between Magna Steyr and the Chinese manufacturers

According to the “Kleine Zeitung” from Graz, the Chinese automobile manufacturers Xpeng and GAC are located in advanced negotiations with Magna Steyr on the assembly of their vehicles in Austria. Magna Steyr, a subsidiary of the contractor and supplier Magna International, based in Graz, is known for the production of vehicles for renowned brands such as Mercedes-Benz, BMW and Toyota. According to reports, the contracts could be signed in June 2025, which would enable a quick start of production.

While Xpeng focuses exclusively on electric vehicles, GAC produces both electrical and conventional combustion vehicles. Which specific models are to be manufactured in Austria is not yet officially confirmed. So far, Xpeng has offered the E-SUV models G6 and G9 and the Limousine P7 in Europe, while GAC plans to bring the Elektro-SUV Aion V to the European market. It is believed that GAC could have this model produced at Magna Steyr.

The SKD method as a strategy for bypassing punitive tariffs

A central aspect of the planned cooperation is the application of the so-called SKD method (Semi Knocked Down). With this manufacturing method, prefabricated assemblies and components from China are delivered to Austria and only assembled there into complete vehicles. So it is not a complete production, but primarily a final assembly in Graz.

This strategy offers a decisive advantage: Since no complete vehicles are imported, but only components, the Chinese manufacturers do not have to pay the high EU customs charges. Without this solution, Xpeng, as a so -called cooperative company, would have to pay 21.3 percent penalty duties in addition to the normal customs set of 10 percent. At GAC it would be an additional 20.7 percent. Due to the local final assembly, these significant additional costs can be avoided.

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Background: EU criminal offenses on Chinese electric cars

On October 30, 2024, the EU introduced final special tariffs on electric cars from China, which are to apply for five years. This measure was followed by a detailed anti-subscription investigation by the EU Commission, which came to the conclusion that Chinese manufacturers benefit from unfair state subsidies that give them a significant competitive advantage on the European market.

The amount of the tariffs varies depending on the manufacturer: BYD has to pay 17 percent special customs, Geely 18.8 percent and Saic even 35.3 percent. Tesla, which produces in Shanghai, is loaded with 7.8 percent additional customs. Other manufacturers who have cooperated with the EU must pay at least 21.3 percent special customs even 35.3 percent.

Germany had repeatedly spoken out against these punitive tariffs under the leadership of Chancellor Olaf Scholz, but was overruled in the decisive vote in the EU Council. The German government fears that China's retaliation measures, which could particularly affect the export -oriented German automotive industry.

Advantages for all companies involved

The planned cooperation offers all parties involved significant advantages. For the Chinese manufacturers, it is not only about the bypass of tariffs, but also about strengthening their presence in Europe. Thanks to local production, you can also react faster and more flexibly to the requirements of the European market.

For Magna Steyr, the potential partnership comes at a strategically favorable time. The company recently lost Jaguar as a customer, and the existing orders from BMW and Toyota expire in 2026. Only the production of the Mercedes G-Class is still secured until 2029. The new orders from Xpeng and GAC would therefore help to better utilize the production capacities of the work in Graz. After 105,100 vehicles in 2023, only 71,900 units were built the following year, which underlines the urgent need for new orders.

Xpeng's strategy and partnerships in Europe

Cooperation with Magna Steyr is part of a more comprehensive European strategy of Xpeng. As early as August 2024, XPENGS CEO He Xiaopeng said in an interview with BNN Bloomberg that his company was in the initial phase of the location selection for a production in Europe. In addition to a production facility, Xpeng is also planning a data center in Europe.

The partnership with Volkswagen plays an important role in Xpeng's European strategy. In December 2023, VW invested $ 700 million in the Chinese electric car manufacturer. In 2024, the two companies expanded their cooperation and agreed on a framework contract for the joint development of an E/E architecture in China. According to Brian GU, Co-President of Xpeng, hundreds of VW employees at Xpeng in China are already working on the development of electric cars. This partnership could help Xpeng to better understand European market processes and to build a location in Europe.

Industry -wide strategy of Chinese manufacturers

Xpeng and GAC are not the only Chinese manufacturers who develop strategies for bypassing the EU criminal offenses. Other companies such as BYD, Chery Automobile and Zeekr are also planning production facilities in Europe. While BYD is planning its own works in Europe, Magna, as a manufacturer for smaller Chinese brands, could represent a cheaper intermediate step with lower production quantities.

Smaller companies such as Elaris AG also check similar solutions. The company examines the possibility of SKD production outside of China in order to avoid EU criminal offenses and continue to be able to offer affordable electric cars.

Cooperation Magna Steyr and China: New dynamics in the European e-car market

The impending collaboration between Magna Steyr and the Chinese manufacturers Xpeng and GAC illustrates the adaptability and determination of Chinese companies to drive their expansion plans in Europe despite trading policy hurdles. The SKD assembly strategy offers a pragmatic approach to bypass the EU criminal offenses and at the same time strengthen the European market presence.

This development could have significant consequences for the European electric vehicle market because it enables Chinese manufacturers to continue to offer competitive electric vehicles in terms of price. This could increase the pressure on European manufacturers to optimize their own electric car offers and make them cheaper.

The decision of Xpeng and GAC to work with Magna Steyr underlines the growing importance of strategic partnerships and flexible production models in the global automotive industry. It remains to be seen whether other Chinese manufacturers will take similar paths and how the EU will react to this strategy to avoid penalty tariffs.

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