A new report states that Austria-based contract manufacturer Magna Steyr is on the cusp of securing two new customers in XPeng Motors and GAC Motor Co. As a result of the reported deal, those Chinese automakers would have an avenue around additional tariffs on imports imposed by the EU, while Magna Steyr gains some much-needed EV manufacturing on its Austrian assembly lines.
Magna Steyr is an automotive contract manufacturer based in Graz, Austria that operates as a subsidiary of Magna International. The business across the pond is known for manufacturing the G-Class for Mercedes-Benz and the Jaguar I-Pace and briefly built the Fisker Ocean SUVs before the American automaker halted production following a filing in Austria equivalent to bankruptcy.
After losing Fisker and Jaguar as clients, Magna adjusted its annual output targets and has been looking to fill those vacated assembly lines since. In 2023, we reported that Magna Steyr signed on to design and build off-road EVs for INEOS, but not until 2026.
As we pointed out last year, another viable option would be to take on the builds for Chinese EV automakers, especially as local production practices can help avoid tariffs imposed by the European Union following a probe last year.
In May 2024, we reported comments from Magna Steyr’s president confirming that all Chinese automakers selling EVs in Europe had been in touch with the contract manufacturer and that those local production discussions were ongoing.
Magna Steyr now appears close to finalizing contracts with at least two Chinese EV automakers – XPeng Motors and GAC Motor Group to build their respective models in Austria for EU customers.
Magna may confirm Chinese EV contracts as early as June
According to a report from Graz-based media outlet Kleine Zeitung last week, Magna Steyr is close to finalizing agreements with both XPeng and GAC to build Chinese EVs in Austria. The report states that the manufacturing process will include a Semi-Knocked-Down (SKD) process, in which pre-fabricated components will be imported from China into Austria before being assembled locally.
While this is welcomed news for Magna Steyr, the contracts from the Chinese EV automakers may not necessarily be a saving grace to get its Graz plant humming at full capacity. The new clients only intend to invest a minimal amount in a small number of initial EV assemblies to test markets in Europe.
Simultaneously, contracting EV assembly to Austria offers the Chinese companies a break from some additional tariffs imposed by the EU last October. This follows a probe that determined several of those marques received unfair subsidies from the Chinese government to expand their global footprints. In the case of XPeng and GAC Motor, they would be looking at additional tariffs of 20.7% if they exported their vehicles directly from China into the EU.
Through this strategy, XPeng already has a market presence in several regions of Europe, hence why it is likely exploring more cost-savvy logistical options while it continues to try to carve its own piece of the market with European consumers.
According to the report, the contracts with the Chinese automakers could be finalized as early as June, although Magna Steyr has not confirmed such talks publicly yet.
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