Stellantis' contrarian China bet
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Every Western automaker is scrambling in response to the growing dominance of faster, more advanced Chinese competitors, but Stellantis stands apart: Instead of trying to beat them, it's joining forces with them.
Why it matters: The company's expanding ties with Chinese partners could be a practical survival strategy — or a desperate sign of surrender by the maker of Jeep, Ram, Fiat and Peugeot vehicles.
State of play: Chinese cars, once considered cheap copycats, have quickly become the industry benchmark, stunning the rest of the global auto industry.
- They're cheaper, and yet more technologically advanced, and Chinese companies are developing them in half the time it takes Western carmakers.
- After slaying foreign brands at home, Chinese companies are now swarming export markets, including Europe, while closing in on the U.S.
Friction point: Western automakers have been fighting to preserve their competitive independence, even as China's gravitational pull on the industry has grown impossible to ignore.
- Crippling pressure from China has intensified automakers' efforts to reduce development costs and replicate supply chains in their home markets.
- Ford created a secret skunkworks project in California to make a low-cost EV platform to match China's best — but even there, it had to license battery technology from a Chinese company.
- And major European carmakers have struck limited technology deals with Chinese companies to avoid falling behind, notes the Financial Times.
Stellantis' new strategy goes further than anyone else's, however — becoming a closely watched test of collaboration with the enemy.
Zoom in: Stellantis already owns 21% of Chinese EV company Leapmotor, and has a 51% stake in a joint venture to sell Leapmotor's vehicles outside of China.
- Now, as part of a broader turnaround strategy unveiled last week, Stellantis plans to build Leapmotor EVs at two underused factories in Spain — the first time a European manufacturer has opened its doors to a Chinese competitor.
- Stellantis is also expanding a partnership with Dongfeng, one of China's largest state-owned automakers, with a plan to build two Peugeot and two Jeep models in China that will be sold locally and exported to other markets.
- And it's forming a similar 51%-owned joint venture with Dongfeng to sell Dongfeng products in Europe, potentially building them at a third underused plant in France.
Threat level: Stellantis' $70 billion strategy has multiple elements, but expanding cooperation with its Chinese partners could be the most consequential.
- While it gains access to affordable EV platforms and vehicles to fill its underutilized factories, Stellantis risks cannibalizing its own brands, both in Europe and other markets, experts say.
What they're saying: "I see this as capitulation dressed up as an elegant strategy," says longtime China automotive expert Michael Dunne, CEO of Dunne Insights.
- "In my view, it's surrender. They're no longer capable of competing against them, so they're joining them."
Reality check: It could be just the beginning of a power shift.
- China's Xpeng is in talks with Volkswagen about buying a factory in Europe, while Nissan is negotiating with Chery and other Chinese carmakers about sharing an underutilized factory in the U.K, according to the FT.
What we're watching: Vilosa said Stellantis could bring Chinese-branded vehicles to Mexico and potentially Canada, but said "it's not possible" in the U.S.
The bottom line: Time will tell whether Stellantis' strategy is a template for struggling legacy automakers — or a warning that China has already won the EV cost and technology battle.
