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SHANGHAI ― Magna Steyr is about to finalize contracts with Chinese automakers Xpeng and GAC Motor Co. to assemble electric vehicles at its plant in Graz, Austria, with semi-knocked down kits imported from China, according to a report.
The contracts, which could be signed as early as June, will enable the two Chinese automakers to avoid paying hefty additional tariffs the European Union imposed on China-made EVs in October, the Kleine Zeitung reported March 15.
The deals will also bring much-needed new business to Magna Steyr, the vehicle contract manufacturing unit of Magna International, the paper said. But the two Chinese automakers are not expected to make sizable investments in the projects initially because they only need to assemble a small number of EVs to test market demand in Europe, the newspaper said.
Starting Oct. 31, EV imports from China are subject to anti-subsidy tariffs of up to 35.3 percent on top of an existing 10 percent duty, following a probe by the European Commission, the executive body of the EU. Xpeng and GAC would face extra tariffs of 20.7 percent if they export EVs from China to member countries of the EU.
Xpeng, founded in 2014 in Guangzhou, is one of China’s most prominent EV manufacturers, growing by more than 30 percent in 2023, selling nearly 200,000 vehicles. The automaker is considering whether to bring its new extended-range electric vehicle (EREV) powertrains to Europe.
GAC, founded in 1997, has development centers in Los Angeles, Milan, and Shanghai and has set a global sales target of 500,000 vehicles by 2030. The company showed a compact electric SUV at the 2022 Paris auto show.
VW Scout, Chinese deals help offset loss of BMW, Jaguar production
Magna Steyr continues to generate revenue from engineering services, including development work for Volkswagen’s Scout brand but it has been forced to streamline operations and cut jobs after key contracts came to an end.
Production of the BMW 5 Series and the Jaguar E-Pace and I-Pace ended last year. Production of the BMW Z4 and Toyota Supra models, which share a platform, will stop in 2026.
The Graz factory will continue to build combustion-powered Mercedes G-Class that will be joined later by an electric variant.
The plant has capacity to build 150,000 cars a year. In 2023, the factory assembled 71,900 vehicles, down from 105,100 in 2022, according to , the Kleine Zeitung.