Struggling European automakers are increasingly looking to China for technological, capital, and production support. Recent reports of collaborations between major players such as Stellantis NV and Mercedes-Benz with Chinese automotive firms highlight a strategic realignment within Europe’s auto industry as it grapples with the pressures of transitioning to electric vehicles.
According to Bloomberg, executives from Stellantis NV have held discussions with Xiaomi and XPeng Motors, exploring various options to restructure its European operations. These include potential equity acquisitions of brands like Maserati or others under the Stellantis umbrella by Chinese automakers, as well as opening up European manufacturing capacity to Chinese partners. Separately, Mercedes-Benz has engaged in preliminary talks with Geely to strengthen its vehicle development capabilities in China, its largest market.
These moves signal a shift in which Chinese automakers are increasingly viewed as strategic allies by traditional European manufacturers. Although no definitive agreements have been reached, the ongoing negotiations reflect a structural transfer of technological leadership within the European automotive sector.
Stellantis NV’s European operations are under significant pressure, prompting the company to seek capital infusion from Chinese investors. Recent financial disclosures reveal record impairments and write-offs totaling €22.2 billion (approximately $25.7 billion), largely linked to a scaled-back EV strategy that includes canceled battery joint ventures and future vehicle models.
Operationally, Stellantis NV’s European factories are running at just 46% capacity. Brands such as Fiat, Opel, and Peugeot face intense competition in Europe from rivals like Volkswagen and Renault, as well as from Chinese brands like BYD, which continue to gain market share. Currently, one in every ten cars sold in Europe is from a Chinese brand.
Stellantis NV’s management reportedly believes that future investment returns will be stronger in the U.S., where it is advancing a $13 billion investment plan for new models, including the Jeep and Ram pickup truck lines. Bringing Chinese automakers into its European operations could provide Stellantis NV with advanced EV technology and software capabilities, while offering Chinese partners improved access to the European market.
The company has firmly denied speculation about splitting its U.S. and European businesses, stating that such claims are unfounded. CEO Antonio Filosa is expected to provide further details on the company’s future strategy during an investor day in the U.S. on May 21.
Beyond talks with Xiaomi and XPeng, Stellantis NV is pursuing multiple avenues of cooperation with Chinese automakers. Bloomberg reported that the company is considering deeper collaboration with existing partner Leapmotor, exploring synergies in EV technology and software for affordable electric vehicles aimed at the European market.
Stellantis NV already distributes Leapmotor vehicles through its European dealer network, and Leapmotor has expressed interest in expanding cooperation in vehicle and component development.
Mercedes-Benz’s engagement with Geely focuses on developing models tailored for the Chinese market, mirroring Volkswagen’s earlier partnership with XPeng to produce vehicles that better suit local tastes. Renault has also partnered with Geely in South Korea and Brazil, leveraging Chinese components to develop an electric Twingo model priced below €20,000.
A common thread in these collaborations is the ability of Chinese automakers to bring new models to market at roughly twice the speed of their European counterparts. With their dominance in EV technology and growing market share in Europe, partnering with Chinese firms is increasingly seen as a necessary step for European automakers to remain competitive.
The broader context for these negotiations is Europe’s structural automotive overcapacity. Bloomberg notes that European car manufacturers face a severe production glut, with union resistance and political pressure making factory closures nearly impossible—as seen in Volkswagen’s decision to cut tens of thousands of jobs instead of shutting plants.
Analysts expect the situation to worsen over the next six to nine months due to global trade tensions and weak demand, leaving many plants operating well below their potential capacity. In this environment, attracting Chinese investment or transferring partial control of European production capacity offers a practical solution for companies like Stellantis NV to address overcapacity while gaining access to essential EV technology.
Comments