Xpeng sets sights on European factory to sidestep tariffs

Chinese car maker Xpeng has become the latest to announce plans for a factory in Europe.

The firm behind the G6 and P7 is in the initial stages of choosing a site, according to comments by its CEO He Xiaopeng in an interview with Bloomberg.

Operating a factory in the EU would allow Xpeng to skirt recently announced tariffs on EVs imported from its homeland. Xpeng is one of a number of Chinese companies which face additional levies of 21.3% on top of the existing 10% import tariff.

He told the news agency that the company wants to build capacity in areas with low labour risks and also plans to open a large data centre in Europe to aid its focus on AI-assisted driving systems.

The announcement sees Xpeng join the likes of BYD, Geely, Chery and Dongfeng, who are all developing manufacturing plants in Europe as part of their plans to expand and localise production.

BYD already manufactures electric buses in Hungary and has said it will build a brand-new passenger car plant in Szeged, Hungary, creating thousands of jobs. Chery has signed a deal with Spain’s EV Motors to open a factory in Catalonia building Omoda models, and Dongfeng is reportedly in talks to set up a plant in Italy. Stellantis partner Leapmotor has already begun production of its T03 model at a former Fiat factory in Poland.

Xpeng, which last year created a partnership with Volkswagen, puts a major emphasis on driver assistance and ‘intelligent’ AI-supported vehicles and plans to use a data centre in Europe to inform its software development.

It believes that such systems will help it gain a foothold in Europe but it first needs to understand driving behaviour and requirements in the region.

Predicting the widescale adoption of advanced driver assistance systems which don’t currently exist, He said: “Selling a million AI-powered cars per year will be a prerequisite for the companies that finally emerge as the winners in the next 10 years, in which the human driver will maybe touch the steering wheel less than once per day on average on their daily commute.

“We are going to see companies rolling out such products from 2025, and Xpeng will be among them.”