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Xpeng Inc. is looking for a manufacturing site in Europe, making it the latest Chinese electric-vehicle maker seeking to mitigate the impact of import tariffs by building its cars in the region.\u00a0<\/p>\n
Volkswagen AG\u2019s Chinese partner is in the initial stages of selecting a site in the European Union as part of its future plan to localize production, chief executive officer He Xiaopeng said in an interview with Bloomberg in its headquarters in Guangzhou, China, on Thursday.\u00a0<\/p>\n
The company expects to build capacity in areas with \u201crelatively low labor risks,\u201d He said, adding that Xpeng also plans to set up a large-scale data center in Europe as efficient software collection becomes paramount for cars\u2019 intelligent driving features.\u00a0<\/p>\n
Xpeng\u2019s broad plan of going global isn\u2019t going to be impacted by higher levies, He maintained, although he noted that some \u201cprofits from European countries will be reduced after the tariff increase.\u201d<\/p>\n
Establishing a manufacturing footprint in Europe would see Xpeng join the growing ranks of Chinese EV makers, including BYD Co., Chery Automobile Co. and Zhejiang Geely Holding Group Co.\u2019s Zeekr, looking to build out production in the region to minimize the impact of the European Union\u2019s decision to\u00a0increase<\/a>\u00a0duties on China-made EVs to as much as 36.3%. Xpeng is set to face an additional tariff of 21.3%.<\/p>\n Added European levies are just one aspect of a wider global trade dispute. The U.S. has imposed tariffs on Chinese EV imports that can top 100%, as the world\u2019s two biggest economies spar over an industry that\u2019s grown rapidly thanks partly to Beijing\u2019s subsidies.<\/p>\n The trade actions have only added to the challenges facing the 10-year-old company in recent years. Xpeng has also struggled with tepid domestic sales, product planning disputes, and a prolonged price war in the Chinese market. Its share price has more than halved since January.<\/p>\n The carmaker delivered around 50,000 vehicles in the first half, only about one-fifth of BYD Co.\u2019s monthly sales. Though its delivery outlook for the current quarter exceeded analysts\u2019 estimates, its projected revenue fell\u00a0well short<\/a>\u00a0of expectations, according to its latest quarterly report.\u00a0<\/p>\n One bright spot for Xpeng is its year-old partnership with VW. Hundreds of the German carmaker\u2019s staff are now working at its headquarters in Guangzhou. Vice president-level managers from both sides meet at least once a week, He said, noting the company is \u201cmaking every effort to ensure the partnership works well.\u201d\u00a0<\/p>\n One example of how the collaboration is benefiting the Chinese company lies in managing complex supply chains. With Volkswagen\u2019s help, Xpeng\u2019s gross margin in the second quarter climbed to 14% from negative 3.9% a year ago.\u00a0<\/p>\n Xpeng also sees its expertise in artificial intelligence and advanced assisted driving features as helping it make inroads into Europe. That\u2019s one reason why it will have to set up a large-scale data center there before it can introduce those features in the region, He said.\u00a0<\/p>\n U.S.-listed Xpeng has also invested heavily in AI-related research and development, including its own chips, He said, noting semiconductors will play more of a critical role in \u201cintelligent\u201d vehicles than battery cells.<\/p>\n \u201cSelling 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,\u201d He said. \u201cWe are going to see companies rolling out such products from 2025, and Xpeng will be among them.\u201d\u00a0<\/p>\n<\/div>\nAI Advantage<\/h2>\n
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