Xpeng Inc. is seeking to arrange a producing base in Europe, becoming the newest Chinese electric vehicle maker to hunt to mitigate the impact of import tariffs by constructing its cars within the region.
Volkswagen AG’s Chinese partner is within the initial phase of choosing a location within the European Union as a part of its future plans to localize production, CEO He Xiaopeng said on Thursday in an interview with Bloomberg at the corporate’s headquarters in Guangzhou, China.
The company expects to expand its capability in areas with “relatively low labor risks,” he said, adding that Xpeng also plans to establish a big data center in Europe as efficient software collection becomes paramount for cars’ intelligent driving functions.
Xpeng’s broader globalization plans wouldn’t be affected by higher tariffs, he insisted, but noted that some “profits from European countries will decline after the tariff increase.”
By establishing a production facility in Europe, Xpeng would join the growing variety of Chinese electric automobile manufacturers, including BYD Co., Chery Automobile Co. and Zhejiang Geely Holding Group Co.’s Zeekr, which are seeking to expand their production within the region to mitigate the impact of the European Union’s decision to increase Tariffs on electric vehicles made in China of as much as 36.3%. Xpeng must expect an extra tariff of 21.3%.
Additional European levies are only one aspect of a bigger global trade dispute. The US has imposed tariffs on Chinese electric automobile imports that may reach as high as one hundred pc because the world’s two largest economies battle over an industry that has grown rapidly thanks partially to Beijing’s subsidies.
The trade measures have only added to the challenges the decade-old company has faced in recent times. Xpeng has also struggled with weak domestic sales, product planning disputes and an ongoing price competition within the Chinese market. The company’s share price has greater than halved since January.
The carmaker delivered around 50,000 vehicles in the primary half of the yr, only a few fifth of BYD Co.’s monthly sales. Although the delivery forecast for the present quarter exceeded analysts’ estimates, forecast sales fell good short expectations, in accordance with the newest quarterly report.
One vibrant spot for Xpeng is its year-old partnership with VW. Hundreds of employees of the German carmaker now work at its headquarters in Guangzhou. The vice presidents of each side meet no less than once every week, He said, noting that the corporate is making “every effort to ensure that the partnership works well.”
One example of how the collaboration advantages the Chinese company is managing complex supply chains. With Volkswagen’s help, Xpeng’s gross margin rose to 14 percent within the second quarter from minus 3.9 percent a yr earlier.
AI advantage
Xpeng also sees its expertise in artificial intelligence and advanced driver assistance features as helpful for its push into Europe. That’s one reason why the corporate needs to construct a big data center there before it might introduce those features within the region, He said.
US-listed Xpeng has also invested heavily in AI research and development, including manufacturing its own chips, he said, noting that semiconductors would play a more crucial role in “smart” vehicles than battery cells.
“Selling a million AI-powered cars a year will be a prerequisite for the companies that emerge as winners in the next decade, when the human driver may touch the steering wheel on average less than once a day on their daily commute,” he said. “By 2025, we will see companies bringing such products to market, and Xpeng will be one of them.”
