Contract manufacturing: Magna assembles Xpeng G6 and G9 in Graz

Rumours surfaced in March that Magna Steyr was close to signing contracts with the Chinese carmakers Xpeng and GAC. For Xpeng, contract manufacturing in Graz is now confirmed – and more than that: it is fully prepared. Xpeng will officially inaugurate its first European production line at Magna today. The initial models assembled in Graz will be the Xpeng G6 and G9, with further series to follow. The companies describe this as the start of “a long-term collaboration for future models”.

The order follows a well-established export strategy in the car industry: SKD assembly. SKD stands for ‘semi-knocked down’, in which vehicles are built in one country and then partially disassembled. These kits and components are exported to the target country and reassembled there – in this case, in Graz. Since only parts, not complete vehicles, are imported, different tariffs apply.

For fully built cars, Xpeng currently faces EU tariffs on Chinese-made EVs: in addition to the existing 10 per cent import duty, a further 21.3 per cent surcharge is levied – almost one third in total. With SKD assembly in Austria, these extra tariffs no longer apply.

And Magna Steyr? Production in Graz has been declining: after more than 105,000 vehicles in 2023, only 71,900 cars were built last year. Jaguar has already ended I-Pace production, while contracts with BMW and Toyota will expire in 2026. Fisker, which planned to have its Ocean SUV built at Magna, has since gone bankrupt. An order from Ineos to manufacture the electric off-roader Fusilier was withdrawn before the first car was even built.

Roland Prettner, President of Magna Complete Vehicles, welcomed the contract from Xpeng: “We are thrilled to collaborate with XPENG, marking a significant milestone as our first Chinese OEM partner here in Europe. This partnership underscores our commitment to innovation and flexibility in meeting the evolving needs of the automotive industry. By leveraging our extensive experience and state-of-the-art facilities, we are well-positioned to support XPENG’s ambitious goals for the European market.”

“Our partnership with Magna fits perfectly in our vision and strategy to strengthen our European capabilities,” added Brian Gu, Vice Chairman and President of Xpeng. “It is a first step in our growth in Europe as we have a long-term commitment to Europe.”

Xpeng entered Europe in 2021, starting in Norway. Across Europe, Xpeng sold just over 8,000 units in the first half of 2025. With an expanding product portfolio, volumes are expected to rise significantly: following the G6 and G9 SUVs, the updated P7 saloon (called P7+) will soon join the line-up. The model was unveiled this week at the IAA Mobility, where Xpeng also announced the opening of an R&D centre in Munich. From there, the company will support technical cooperation and adapt products for local markets.

cnevpost.com, carnewschina.com, autonews.gasgoo.com, globenewswire.com

This article was first published by Cora Werwitzke for electrive’s German edition.