Could Magna soon build electric cars for Xpeng and GAC?

As reported by the German Kleine Zeitung, Magna is said to be “on the verge of concluding assembly orders for two top Chinese brands” for the plant in Graz. These are said to be startup and VW partner Xpeng and the large corporation GAC. There is no confirmation from Magna yet; the company did not want to comment on “ongoing negotiations nor other details” to the Kleine Zeitung.

The report does not reveal which models will be produced in Graz – Xpeng already offers the electric SUV models G6 and G9 in Europe, as well as a sedan called P7. The electric SUV GAC Aion V from GAC or its sub-brand Aion has yet to launch in Europe. However, the exact model is of secondary importance to Magna anyway, since for the time being it is only a matter of small-scale assembly – and not a large-scale order for which production facilities would have to be converted.

Behind the as-yet unconfirmed orders is an export strategy established in the automotive industry, known as SKD production. This abbreviation stands for semi-knocked-down, in which vehicles are built in one country and then partially taken apart again. These assemblies and individual parts are then exported to the destination country and reassembled there – which in this case is supposed to happen in Graz. Since only car parts and not complete cars are officially imported, different customs rates apply.

The focus here is, of course, on the EU’s special tariffs on the import of electric vehicles manufactured in China. Xpeng would have to pay a special tariff of 21.3 per cent in addition to the ten per cent import tariff, which is almost a third. These special tariffs would not apply if the SKD assembly were carried out in Austria.

In Graz, Magna Steyr’s contract manufacturing is currently in decline, with only 71,900 cars built last year, down from over 105,000 in 2023. Jaguar has already pulled out with the production of the I-Pace, and contracts with BMW and Toyota will also expire in 2026. And Fisker, which wanted Magna to build its electric SUV Ocean, is known to be bankrupt. An order from Ineos to manufacture the electric off-roader Fusilier was withdrawn before the first car was built.

kleinezeitung.at, orf.at (both in German)