The contract manufacturer Magna Steyr, based in Austria, has confirmed that several Chinese suppliers are discussing the possibility of locally producing electric vehicles before selling them in Europe. The decision could be influenced by the imminent threat of tariffs that Europe may impose on China, as several automakers continue to expand into new overseas markets.
Magna Steyr is an automotive subcontractor based in Graz, Austria, operating as a subsidiary of Magna International. The company is known for producing the Mercedes-Benz G-Class and the Jaguar I-Pace, and briefly built the Fisker Ocean SUVs before the American automaker ceased production following bankruptcy proceedings in Austria equivalent to insolvency.
With the Ocean production halted, Magna had to adjust its annual production targets and is looking to fill these vacant assembly lines. Magna Steyr has committed to designing and building electric off-road vehicles for INEOS, but not until 2026.
Another viable option is to undertake the construction of electric vehicles for Chinese automakers, especially since local production practices could help them avoid the imminent tariffs currently being debated by the European Union.
According to recent comments by the president of Magna Steyr, almost all Chinese automakers selling EVs in Europe have been contacted, and discussions on local production are ongoing. Here are the latest updates.
Magna could assist Chinese automakers in producing EVs in Europe
During a media event held at the Magna Steyr plant in Graz, company president Roland Prettner indicated that several Chinese automakers had been contacted over the past year regarding the production of electric vehicles and the need for local production.
In addition, Mr. Prettner mentioned that all foreign automakers who contacted him have been “very active” in seeking Magna’s manufacturing expertise. While the president did not name any automaker directly, brands like Nio, XPeng, BYD, and Zeekr immediately come to mind, as they are already selling Chinese electric vehicles in Europe.
Mr. Prettner stated that discussions are ongoing for Magna Steyr to determine its role (if any) in the localized production of Chinese EVs intended for sale in Europe: “Chinese suppliers are testing with different distributors what they believe the volume of their vehicles in Europe will be. Of course, there is always a discussion on how we can produce these vehicles here in Graz.”
Mr. Prettner mentioned that capacity constraints are not a problem for Magna Steyr, which produced over 112,000 complete vehicles with paint in 2022. However, a potential obstacle could be the tariffs imposed by Europe on Chinese automakers, further reason for consistent localized production.
The EU has threatened to impose tariffs on Chinese EVs since fall 2023, when it launched an investigation to determine if these foreign automakers were receiving unfair subsidies. This month, China reciprocated with 25% tariffs on automakers and other sectors based in Europe importing goods into the country, demanding that the European Commission share the results of its investigation before the beginning of June.
While Europe assesses its next steps, the United States has already imposed 100% tariffs on Chinese electric vehicles, which may deter entry into North American markets and hinder any plans for local production in the U.S. Europe still has hope as many Chinese EVs are already being shipped and sold, but localized production could help ease tensions between the two markets.