Struggling automotive giant Stellantis NV (STLA) is turning its attention to China, reportedly holding talks with Xiaomi Corp. and Xpeng (XPEV) to seek investment in its European operations. This move aims to secure funding, technology, and production capacity support for its European business, while allowing the company to concentrate its investment focus on the American market.
Stellantis executives have held separate meetings with Xiaomi and Xpeng to discuss various possibilities for restructuring its European operations. Options include Chinese automakers acquiring equity in Maserati or other brands, as well as opening up European manufacturing capacity to Chinese partners. Sources familiar with the matter revealed that no definitive deals have been reached yet. Following the news, Xpeng’s US-listed ADRs rose 5.5 percent at one point, Xiaomi’s share price increased by 2 percent, and Stellantis’ stock also narrowed its losses.
Stellantis’ European business is facing multiple pressures, including overcapacity, fierce competition, and the high costs of electrification transition. Its brands such as Fiat, Opel, and Peugeot are under attack on multiple fronts in the European market, having to contend not only with traditional competitors like Volkswagen and Renault but also with continuous encroachment by Chinese brands such as BYD. Currently, one out of every ten vehicles sold in the European market comes from a Chinese brand.
Insiders revealed that Stellantis management believes higher future investment returns will come from the US market, therefore adopting a cautious approach towards committing large-scale additional investments in Europe. Introducing Chinese automakers to invest in its European operations could not only bring Stellantis advanced electric vehicle technology and software capabilities but also provide Chinese automakers with better access channels to enter the European market.
Besides engagements with Xiaomi and Xpeng, Stellantis is also advancing cooperation with Chinese automakers on multiple fronts. According to previous reports by Bloomberg, the company is considering deepening collaboration with its existing Chinese partner, Zhejiang Leapmotor Technology, with both parties exploring potential synergies in electrification and software technology for affordable electric vehicles targeting the European market. In the US market, Stellantis is advancing an approximately $13 billion investment plan for new models, and demand for its brands such as Jeep and Ram pickups has somewhat recovered.
Some informed sources stated that this restructuring could ultimately lead to further separation between Stellantis’ European and American business segments, but a full split is not the current focus of discussions. In response, Stellantis issued a strongly worded statement, saying it “categorically states that there is no basis to the rumours that the Company is considering a demerger plan, and any assertion to the contrary is pure conjecture.”
