- Chinese EV makers seek manufacturing facilities in Europe
- Plans involve buying or renting idle plants
- Experts warn of long-term consequences
Several of China’s biggest automakers are on the hunt for manufacturing capacity as they plan to use idle plants and partner with traditional automakers to bring cars to market faster.
This week, Leapmotor announced that it will begin manufacturing its vehicles in Europe thanks to a partnership it formed with Stellantis Group.
The auto giant that owns Jeep, Fiat and many more acquired a 21% stake in Leapmotor in 2023, but now the Chinese company will help co-develop new models under the Opel brand and produce multiple Leapmotor models at the Stellantis plant in Villaverde, Madrid.
BYD, which was the fastest-growing major automaker and biggest seller of electric vehicles in Europe last year, is also expected to be in talks with Stellantis and other automakers to take over their EU plants as part of its international expansion drive, Bloomberg News reported.
Despite building its own plant in Szeged, Hungary, set to open in 2027, BYD is also looking to acquire manufacturing capacity from struggling legacy brands in Europe, and Stella Li, BYD vice president in charge of international operations, cited the fact that Stellantis’ Maserati luxury brand was “very interesting.”
Additionally, Xpeng is reported to be in talks with German automaker Volkswagen and other automakers about purchasing a factory in Europe, which would help it bring its Tesla-rivalling line of electric vehicles to European customers more quickly.
According to Business Day, Ellis Cheng, Xpeng’s managing director for northeast Europe, told the Financial Times’ Future of the Car summit that not all European factories can “meet the requirements of their latest or future products,” adding that Volkswagen’s plants were a “bit old.”
Analysis: short-term gain for long-term pain
Many traditional automakers are interested in forging partnerships with Chinese EV brands as they clearly have the advantage in battery technology and software and can produce vehicles at extremely low cost using the latest advancements in manufacturing.
What’s more, sluggish demand for many Western electric vehicles has left manufacturers exposed, and some plants, many of which have been remodeled and renovated at great expense, are currently operating at a fraction of their capacity.
“In the short term, European carmakers need to optimize their factories and Chinese manufacturers want to enter the market, so it makes sense. But I’m concerned about what that actually means in the long term,” Julia Poliscanova, senior director of electric mobility vehicles and supply chains at campaign group Transport and Environment, told CNBC.
“Once they help the Chinese brands get that brand awareness and once people get the car and see that it’s not that bad, I think it can be a point of no return,” Poliscanova added.
While a partnership presents an opportunity to co-develop cars and share technologies, there is also a real risk that European automakers will lose their identity and fall further behind if burgeoning Chinese brands gain a greater presence in their domestic markets.
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