Chinese electric vehicle manufacturer Xpeng is gearing up for a significant expansion into the European market, as reported by Bloomberg News. The company is planning to introduce entry-level cars and establish local production facilities in Europe, aiming to circumvent potential tariffs and strengthen its global presence.

European Production Plans

Xpeng is actively searching for a site to set up local production in Europe. This move comes as the European Union is set to finalize import duties for Chinese EV makers this year. By manufacturing within the EU, Xpeng hopes to avoid the impact of these tariffs, which could reach up to 36.3% for China-made EVs.

“The carmaker is in the initial stages of selecting a site in the European Union as part of its plan to localize production of its eponymous brand,” said Chief Executive Officer He Xiaopeng in an interview with Bloomberg at the company’s headquarters in Guangzhou, China.

Focus on AI and Advanced Driving Features

Xpeng sees its expertise in artificial intelligence and advanced assisted driving features as key advantages in penetrating the European market. To support these technologies, the company plans to establish a large-scale data center in Europe before introducing these features in the region.

“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,” He reportedly stated.

Challenges and Opportunities

Despite facing challenges such as tepid domestic sales and a prolonged price war in the Chinese market, Xpeng remains optimistic about its global expansion. The company’s partnership with Volkswagen AG has proven beneficial, with hundreds of VW staff now working at Xpeng’s headquarters in Guangzhou.

One bright spot for Xpeng is its collaboration with Volkswagen in managing complex supply chains. This partnership has helped Xpeng improve its gross margin, which climbed to 14% in the second quarter from a negative 3.9% a year ago.

US Market and Tariffs

While focusing on Europe, Xpeng also faces challenges in the US market, where tariffs on Chinese EV imports can top 100%. This trade tension between the world’s two largest economies has added to the hurdles faced by the 10-year-old company.

EVXL’s Take

Xpeng’s ambitious plans to expand into Europe with local production and a focus on AI-driven vehicles represent a significant step in the global EV market. This move aligns with the broader trend of Chinese EV makers seeking to establish themselves internationally. As we’ve seen with other Chinese brands like Xpeng, the combination of competitive pricing and advanced technology could potentially disrupt the European market.

However, established players like Volkswagen are also ramping up their EV efforts, setting the stage for intense competition in the coming years. The success of Xpeng’s European venture could pave the way for other Chinese EV manufacturers to follow suit, potentially reshaping the global automotive landscape.

Photo copyright EVXL.