Takeaways:
- Magna’s Graz plant now assembles five Chinese EV models across two OEMs, proving SKD assembly as a scalable tariff-bypass mechanism at a fraction of dedicated-plant cost.
- The EU Battery Regulation’s supply chain due diligence requirements, effective August 2027, will require disclosure of Chinese component provenance for Graz-assembled vehicles.
GAC Group began production of the Aion UT at Magna’s Graz plant in Austria on March 26, 2026, marking the second GAC electric vehicle assembled at the facility following the Aion V, which entered production in November 2025 . The Austrian plant now assembles five Chinese EV models across two manufacturers, with Xpeng producing the G6, G9, and P7+ at the same site .
The semi-knocked-down assembly process shifts the vehicles’ origin status to EU-made, exempting them from the European Commission’s anti-subsidy countervailing duties. These duties range from 7.8% to 35.3% on top of the standard 10% tariff for battery electric vehicles imported from China . By assembling in Austria, GAC and Xpeng avoid this cost burden while bypassing the multi-year lead time and €1 billion-plus investment required for a dedicated plant.
The SKD Tariff Bypass Gains Scale
According to Magna’s announcement, the Graz facility has 125 years of manufacturing history and has produced over 4 million vehicles cumulatively . The plant’s flexible lines handle internal combustion, hybrid, and electric vehicles simultaneously, offering Chinese OEMs a low-capital-expenditure entry route into the EU market.
GAC targets 300,000 overseas units in 2026. January overseas wholesale sales rose 69% year-on-year, with retail sales in Greece surging 233% month-on-month . The Greece figures reflect tariff relief from Graz assembly without requiring GAC to establish a separate Southern European manufacturing presence.
Regulatory Exposure Ahead
SKD assembly using Chinese-sourced components carries its own EU regulatory exposure. Under the EU Battery Regulation, supply chain due diligence obligations for manufacturers and importers placing batteries on the EU market take effect August 18, 2027 . Companies with net turnover of at least €40 million must implement traceability systems identifying raw material origins, including lithium and nickel, with third-party audits required.
The question for European policymakers: does the current origin-rules framework adequately address SKD assembly intensity for vehicles whose battery packs, motors, and electronics remain Chinese-sourced, and will the 2027 traceability deadline force disclosure that changes the tariff calculus?
