In Graz, Austria, the first European-assembled models of the Chinese Xpeng G6 and G9 have rolled off the production line. The factory will initially assemble the two SUV models, but additional Xpeng vehicles are in the planning for the future.

For Xpeng, which started selling in Norway in 2021 and has since expanded to over 46 countries, manufacturing in Europe is a milestone. In spite of labor costs in Austria being among the EU’s highest (like €49/h for manufacturing), it still pays off to avoid the EU’s tariffs on Chinese EVs.

Ready for prime time

We drove the two of them on German roads, the refreshed midsize G6 and Xpeng’s brand-new flagship G9 SUV, just a few weeks ago. Especially the G9 distinguishes itself through blistering charging speeds and an intelligent, luxurious cabin that is remarkably generous for its price. Another milestone proving Chinese tech is ready for prime time, we wrote at that time.

In the first six months of 2025, Xpeng reported sales of 8,338 cars in Europe, with the G6 accounting for 67% (5,615) and the rest the P7 sedan. The G6 ranges in price in Belgium between €46,990 and €51,990. The G9 is new and open for ordering.

With all-in Belgian prices of €63,990 for the standard version and € 73,990 for the Performance version, this Xpeng G9 does not fall short of possible competitors like a Volvo EX90 (€92,570), the Mercedes-Benz EQE SUV (€84,700), or the BMW iX (€85,400).

A slight difference, those competitor prices are all ‘starting’ prices for the basic trim. Unlike the Chinese full-option offering, you’ll still need to dress those up with options, and that can get pretty expensive.

How does Magna Steyr fit in?

Those are prices with the EU’s anti-subsidy duty calculated in, meaning 20.7% in the case of Xpeng, on top of the base import duty of 10%. So how does Magna Steyr fit in to make an extra profit?

Magna Steyr in Graz is known for its ‘multi-powertrain’ flexibility. It can build up to 150,000 vehicles a year with conventional ICE engines, hybrids, plug-in hybrids, and fully electric powertrains, sometimes on the same production line.

It builds cars for many OEMs, with current and past clients including Mercedes-Benz (G-Class), BMW (5 Series, Z4), Jaguar (I-Pace, E-Pace), Toyota (GR Supra), etc. The BMW Z4 and Toyota GR Supra have been built on the same line, like the Jaguars’ E-Pace and I-Pace, which also share the same hall capacity. But these are virtually the same cars underneath.

A Magna Steyr assembly hall can run different brands and models in sequence, as long as they’re engineered for the line. A shared line means lower cost and faster start for XPeng, as there is no need to tool out a unique hall. XPeng can deliver EU-assembled cars now, without waiting for a greenfield plant this way.

Semi-Knocked-Down (SKD)

In Graz, cars are mostly assembled, so-called Semi-Knocked-Down (SKD) manufacturing. A car is partially disassembled in the ‘home’ country (China in this case). Large sub-assemblies, such as the body-in-white, drivetrain, battery pack, and interior modules, are shipped abroad.

At Magna Steyr in Austria, these modules are reassembled into a finished vehicle, tested, and homologated for the local market. Import duties on entirely built cars are usually higher than on SKD kits. Local final assembly often changes the vehicle’s ‘country of origin’, so it becomes European, and no extra duties are imposed.

But labor costs in Austria are among the highest in Europe, so how do you make sense of this? XPeng’s plants in China (Zhaoqing, Guangzhou) are highly automated with robotic welding and painting, etc., which generally reduces direct labor hours versus older lines.

Modern final assembly is typically on the order of 20 to 30 labor hours per vehicle, model, and plant dependent. In China, the cost is estimated to be between €90 and €130 per vehicle in the private sector, as in Xpeng’s case, up to €130 – €200 in the public sector. In Austria, the estimated cost per vehicle is around €900.

Doing the math

Let’s explore some AI-powered math comparing China-built and EU-imported vehicles, with SKD production in Austria. Let’s take a mid-size EV with a CIF (cost+insurance+freight) customs value of €28,000 if shipped complete from China.

Add 10% basic duty (€2,800) and 20.7% anti-subsidy duty (€5,796). Ocean RoRo transport (freight slot rate, insurance, port handling, inland haulage, and administration) adds another €1,000 on average per vehicle. So all this added together amounts to €9,600 per vehicle (ignoring VAT recovery, dealer logistics, etc.).

With SKD manufacturing in Austria, EU tariffs on finished cars are €0, as the car is considered EU origin after assembly. Freight for SKD kits is in a similar order as for finished vehicles, depending on packing efficiency; often €600–1,200. Let’s use €900 as a midpoint.

Austrian assembly labor and overhead, let’s say roughly 20 hours of line assembly plus testing time at €49/h adds a €980 labor component to the car’s cost. However, Magna’s program fees and plant overhead will increase the total cost of conversion. OEMs often budget €1,500 to €3,000 per unit for contract assembly, model-dependent.

So, even after paying Magna to assemble, local SKD often undercuts the tariff burden of importing a fully built car from China by several thousand euros per unit at today’s EU duty levels. That’s the core economic rationale for XPeng’s Austria move.