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Caption: He Xiaopeng

Phoenix.com Technology News: On August 27, Beijing time, He Xiaopeng, CEO of Xpeng Motors, said that the company is selecting a site for a European manufacturing plant. Currently, Chinese electric vehicle manufacturers are reducing the impact of import tariffs by building factories in Europe, and Xpeng Motors has also joined this group.

European factory

He Xiaopeng was interviewed by Bloomberg at the company's Guangzhou headquarters last Thursday. He said that building a factory in Europe is part of the company's future localized production plan, and that the site selection in the EU is in the early stages, and the company plans to build production capacity in regions with "relatively low labor risks." He Xiaopeng also said that since efficient software collection is crucial to the intelligent driving function of cars, Xiaopeng Motors also plans to build a large data center in Europe.

He insisted that Xpeng's global expansion plans would not be affected by higher tariffs, but he also mentioned that some "profits will be reduced" from European countries after the tariffs increase.

The European Commission has decided to impose an additional tariff of up to 36.3% on electric vehicles made in China. Among them, Xpeng Motors will be subject to an additional tariff of 21.3%. Previously, Chinese electric vehicle manufacturers such as BYD, Chery, Geely, and Zeekr have sought to build factories in the EU to reduce the impact of tariffs.

Foreign tariffs have made matters worse for Xpeng, which has already faced challenges in recent years. It also faces tepid domestic sales, product planning disputes and a protracted price war in the Chinese market. Its stock price has more than halved since January.

In the first half of this year, Xpeng Motors delivered about 50,000 vehicles, only about one-fifth of BYD's monthly sales. Although the delivery outlook for this quarter exceeded analysts' expectations, Xpeng Motors' expected revenue is still far below expectations according to its latest financial report.

Collaboration with the public

One bright spot for Xpeng Motors is its one-year partnership with Volkswagen, with many Volkswagen employees now working at Xpeng Motors’ headquarters in Guangzhou.

He Xiaopeng noted that vice president-level managers from both sides meet at least once a week and the companies are "making every effort to ensure the smooth progress of the partnership."

The partnership has benefited Xpeng, helping it manage a complex supply chain. With VW’s help, Xpeng’s gross margin climbed to 14% in the second quarter from -3.9% a year ago.

AI Car

Xpeng believes its expertise in artificial intelligence (AI) and advanced driver assistance features will help it enter the European market, and He Xiaopeng pointed out that this is one reason why Xpeng has not yet launched these features in Europe and built a large data center first.

The company is also investing heavily in AI-related research and development, including developing its own chips, He said, noting that semiconductors will play a more critical role in "smart cars" than batteries.

"In the next 10 years, if companies want to become the ultimate winners, the prerequisite is to sell 1 million AI cars every year. By then, human drivers may touch the steering wheel less than once a day on average during their daily commute. We will start to see companies launch such products from 2025, and Xiaopeng Motors will be one of them." He Xiaopeng said. (Author/Xiao Yu)

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