- Chinese EV makers are looking for manufacturing facilities in Europe
- Plans involve buying up or hiring idle plants
- Experts warn of the long-term consequences
A number of China’s largest carmakers are on the hunt for manufacturing capacity, as they plan to make use of idle plants and team up with legacy automakers in order to bring cars to market faster.
This week, Leapmotor has announced that it will start manufacturing its vehicles in Europe thanks to a partnership it formed with the Stellantis Group.
The automotive giant that owns Jeep, Fiat, and many more took 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 the biggest EV seller in Europe last year, is also tipped to be in talks with Stellantis and other carmakers about taking over their EU plants as part of its international expansion drive, Bloomberg News reported.
Despite building its own plant in Hungary's Szeged, which is due to open in 2027, BYD is also reportedly looking to snap up manufacturing capability from struggling legacy brands in Europe, with Stella Li, BYD's vice president in charge of international operations, citing the fact that Stellantis' Maserati luxury brand was “very interesting”.
In addition, Xpeng is reported to be in talks with German carmaker Volkswagen and other carmakers about purchasing a factory in Europe, which would help it bring its line-up of Tesla-rivaling EVs to European customers more quickly.
According to Business Day, Ellis Cheng, Xpeng’s managing director for northeastern Europe, told the Financial Times’ Future of the Car summit that not all Europeans factories can “satisfy the requirements of its latest or future product requirements”, adding that Volkswagen’s plants were a “bit old”.
Analysis: short term gain for long term pain
Many legacy automakers are keen to forge partnerships with Chinese EV brands, seeing as they clearly have the lead on battery technology and software, and can produce vehicles at extremely low cost using the latest manufacturing advances.
What’s more, the slow-burning demand for many Western electric vehicles has left manufacturers exposed, with some plants, of which many have been re-tooled and refreshed at great expense, currently operating at a fraction of their capacity.
“In the short-term, European carmakers need to optimize their factories and Chinese automakers want to enter the market, so it makes sense. But I do worry about what that actually means long-term,” Julia Poliscanova, senior director for vehicles and e-mobility supply chains at the 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 such a bad car, 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 lose their identity and lag even further behind if the burgeoning Chinese brands gain a greater foothold in their domestic markets.
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