Magna Steyr in discussions with several Chinese automakers to localize EV production in Europe

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Austria-based contract manufacturer Magna Steyr has confirmed that several Chinese OEMs are discussing the possibility of local EV production ahead of further sales in Europe. The decision may be swayed by the looming threat of tariffs Europe may impose on China as several automakers continue to expand to new markets overseas.

Magna Steyr is an automotive contract manufacturer based in Graz, Austria that operates as a subsidiary of Magna International. The business across the pond is known for manufacturing the G-Class for Mercedes-Benz and the Jaguar I-Pace and briefly built the Fisker Ocean SUVs before the American automaker halted production following a filing in Austria equivalent to bankruptcy.

With Ocean production frozen, Magna has had to adjust its annual output targets and is looking to fill those vacated assembly lines. We’ve already reported that Magna Steyr has signed on to design and build off-road EVs for INEOS, but not until 2026.

Another viable option is to take on the builds for Chinese EV automakers, especially as local production practices might help them avoid impending tariffs currently being discussed by the European Union.

According to recent comments by Magna Steyr’s president, nearly all Chinese automakers selling EVs in Europe have been in touch, and those local production discussions are ongoing. Here’s the latest.

Chinese EV production Europe
Top view of Magna Steyr in Graz, Austria / Source: Magna International

Magna may help the Chinese with EV production in Europe

During a media event held at Magna Steyr’s Graz plant, company president Roland Prettner shared that several Chinese automakers have been in touch over the past year regarding EV production and the need to localize.

Furthermore, Prettner relayed that each and every foreign automaker that has reached out has shown “strong activity” in acquiring Magna’s manufacturing expertise. The president didn’t name any automakers directly, but brands like NIO, XPeng, BYD, and ZEEKR immediately come to mind as they already sell Chinese EVs in Europe.

According to Prettner, those discussions are ongoing as Magna Steyr determines its role (if any) in the localized production of Chinese EVs to be sold around Europe. Per Prettner:

Chinese OEMs are testing with different distributors about what they think the volume of their vehicles in Europe could be. Of course, there is always the discussion about how we can produce these vehicles here in Graz

Prettner said capacity constraints are not a problem for Magna Steyr, which produced over 112,000 complete vehicles with paint in 2022. One potential hurdle however, could be tariffs imposed on Chinese automakers by Europe, – all the more reason for steadfast localized production.

The EU had threatened tariffs on Chinese EVs since the fall of 2023 when it opened a probe to determine if those foreign automakers were receiving unfair subsidies. Just this month, China threatened retaliatory 25% tariffs on automakers and other segments based in Europe importing goods into the country, demanding that the EU Commission share its probe results by early June.

While Europe mulls its next move, the US has already implemented a 100% tariff on Chinese EVs, which is sure to discourage entry into North American markets and sully any plans for local US production. There is still hope for Europe as many Chinese EVs are already being shipped in and sold, but local production may help ease tensions between the two markets.

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