Xpeng plans to manufacture electric vehicles (EVs) in Europe, circumnavigating the European Commission’s import taxes on China-made EVs.
Xpeng’s Chief Executive Officer (CEO) He Xiaopeng told Bloomberg that his company is currently in the initial stages of selecting a site in Europe for EV production. He added that Xpeng is seeking a location with low labor risks.
He noted that the EU Commission’s new tariffs on China-made EV imports do not significantly impact Xpeng’s global expansion plans. However, the EU’s tariffs do affect Xpeng’s profits in some European countries.
Xpeng’s EU tariff rate for China-made EV imports is 21.3%. It will also have to pay the EU’s current import duty of 10% on top of the 21.3%. So, local production in Europe would be better for profitability.
The Chinese automaker will likely receive some support from European partner Volkswagen. Xpeng and VW partnered to develop E/E Architecture in locally produced vehicles in China. According to Xpeng’s CEO, the company’s partnership with Volkswagen has helped it navigate through complex supply chains. With VW’s support, Xpeng managed to increase its gross margin in the second quarter to 14% up from –3.9% a year ago.
Besides a potential EV factory, Xpeng may also establish a large-scale data center in Europe to introduce advanced assisted driving features in cars launched locally.
“Selling a million AI-powered cars per year will be a prerequisite for the companies that finally emerge as the winners in the next 10 years, in which the human driver will maybe touch the steering wheel less than once per days on average on their daily commute. We are going to see companies rolling out such products from 2025, and Xpeng will be among them,” said Xpeng’s CEO.
If you have any tips, contact me at maria@teslarati.com or via X @Writer_01001101.
