Chinese EV maker Xpeng Inc. has launched its first European production line at Magna Steyr's Graz plant in Austria, marking a major step in its global expansion efforts.

This collaboration leverages Magna's extensive manufacturing expertise and aims to establish a comprehensive European value chain, including a new R&D hub in Munich to better understand local preferences and support vehicle localization.

Production at Magna has already begun, with full-scale manufacturing expected soon, giving Xpeng a competitive edge over rivals like BYD, which is still building its factory in Hungary.

Local assembly is expected to reduce delivery times, lower costs, and help Xpeng meet EU standards, thereby enhancing its market competitiveness and customer experience.

The company plans to develop an ecosystem around its vehicles, including charging solutions and software services, to strengthen its market presence in Europe.

Xpeng's European strategy also involves building a new manufacturing facility in Austria, which will boost local employment and technological development.

While details about the specific models to be produced remain undisclosed, the company is focusing on adapting to European regulations and consumer preferences.

Despite uncertainties about the factory’s maximum capacity and additional model assembly, the move is part of a broader strategy to diversify markets amid challenges in China’s domestic EV sector.

Xpeng's stock responded positively to the announcement, rising 2.20% to $21.33 in premarket trading, reflecting investor confidence.

The company showcased its latest models and future technologies, including humanoid robots, flying car prototypes, and the SEPA platform, at the 2025 Munich Motor Show.

CEO He Xiaopeng announced plans to build an AI-driven ecosystem centered on smart EVs, robotics, and flying vehicles, aiming to become a leading global AI-focused automaker.

Despite rapid growth—delivering over 271,000 EVs in the first eight months of 2025, tripling last year's figures—Xpeng has faced setbacks like recalling most P7+ models due to a steering issue, highlighting ongoing quality control challenges.