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<\/a><\/p>\nStellantis deal to build Dongfeng EVs in Europe is latest in series of partnerships between Western and Chinese firms<\/p>\n
China built its automotive expertise on enforced partnerships with foreign brands. The reward for global car makers was market access and billions in profits.\u00a0But it came at a long-term price: those once humble manufacturing partners have become some of their toughest competitors globally.<\/p>\n
Now global car makers are seeking help from the same Chinese partners as they scrabble to reduce costs and lift technology to the new Chinese\u00a0standard. There\u2019s one key difference, though: today\u2019s partnerships have a lighter touch than the old industrial tie-ups mandated all those years ago in China.<\/p>\n
\u201cIf you have a partnership with China and a good connection to Chinese suppliers,\u00a0I think that is really one of the key things which will make you stronger,\u201d Volvo CEO H\u00e5kan Samuelsson told the recent Financial Times Future of the Car conference.<\/p>\n
Car makers operating at the volume end of the European market are suffering a doom spiral. A higher cost base in Europe is being pushed even higher as they lose manufacturing scale for one key reason: the Chinese are eating their market share.<\/p>\n
\u201cWe’re competing with OEMs from China, but they have a very clear advantage around massive scale, as they export product into Europe,\u201d Ford of Europe boss Jim Baumbick told the Financial Times conference. \u201cWe have to find our own way in Europe to generate competitive scale. We believe doing that through partnerships is a way to compete.\u201d<\/p>\n
Ford is reportedly talking to Geely about building cars<\/a> at its underutilised Kuga<\/a> plant in Valencia, Spain,\u00a0as it looks to lower its industrial costs.<\/p>\n Ford hasn’t confirmed this report but has ramped up speculation that it will leverage Geely electrified platforms with the announcement that it will launch two new \u2018multi-energy\u2019 crossovers in Europe by 2029.<\/p>\n \u201cWe talk to tons of different companies all the time,\u201d Baumbick told Autocar in response to our question.<\/p>\n A possible future Geely link-up would increase the number of partnerships Ford has on car development in Europe to three, after leveraging the Volkswagen Group’s MEB platform for the Explorer<\/a> and Capri<\/a> and now Renault for two small electric cars<\/a>\u00a0on the Renault 5<\/a> platform, due in 2028.<\/p>\n This kind of cherry-picking approach to partnerships is very different from the massive tie-ups of old, such as the Renault-Nissan Alliance or DaimlerChrysler. \u201cWe look for opportunities where we can both win and share,\u201d Baumbick said.<\/p>\n Chats with potential partners can give a useful insight into where your company\u00a0sits in\u00a0terms of tech and cost, said Baumbick:\u00a0\u201cWe can test [our] own internal hypothesis around the competitiveness of choices we’re making internally versus maybe leveraging partner technologies or assets for scale.”<\/p>\n There was some surprise in the industry when Ford went with Renault to develop and build its small EVs, rather than develop its existing\u00a0relationship with Volkswagen. Baumbick\u2019s boss, CEO Jim Farley, said we shouldn\u2019t have been: among other benefits, Renault\u2019s solution was cheaper.<\/p>\n One of the furthest down the road in terms of incorporating knowhow from a Chinese partner is Stellantis, which has quickly leveraged its investment in EV specialist Leapmotor not just to fill its underutilised European factories but also use its tech for new models, starting with a new Vauxhall\/Opel SUV, due in 2028<\/a>.<\/p>\n Stellantis has also signed a similar deal with its long-time joint-venture partner Dongfeng<\/a>, setting up a Stellantis-controlled\u00a0European arm\u00a0to import the Chinese company’s\u00a0upmarket Voyah EVs and tap into its\u00a0engineering expertise.<\/p>\n Stellantis has moved fast to seek Chinese help in filling its European plants, estimated by the bank Jefferies to be suffering from spare capacity totalling around a million units a year.<\/p>\n Leapmotor will build its\u00a0B10 and C10 EVs at\u00a0the Stellantis facility in Zaragoza<\/a>, Spain,\u00a0starting this year, while the Dongfeng deal creates \u201cpotential\u201d for production of Dongfeng EVs in Rennes, France.<\/p>\n A rash of similar reports linking Chinese production in existing European plants \u2013 including Chery and Dongfeng\u00a0at Nissan\u2019s Sunderland plant<\/a>\u00a0– has yet to translate to solid contracts, bar Leapmotor’s Zaragoza deal.<\/p>\n \u201cWith the exception of Chery’s early deal with Nissan in Spain, Chinese OEMs seem reluctant to rely on older, less efficient and unionised facilities,\u201d Philippe Houchois, automotive analyst at Jefferies, wrote in a note to investors.<\/p>\n For Leapmotor,\u00a0however, the broader link-up with Stellantis is a money-saver as it fights to grow share in Europe. \u201cThis, in my opinion, is another kind of profitability,\u201d CFO Tengfei Li\u00a0said on a recent earnings call. \u201cWithout this kind of partnership, we may have to invest 10 times higher than we have and may not reach the same results.\u201d<\/p>\n For some established manufacturers, Europe has become so difficult that they can no longer develop models specifically for the region, and\u00a0China is the preferred source for the electrified platforms and technology needed to keep pace with the tech and cost upheavals of the past five years or so.<\/p>\n Nissan is one example:\u00a0CEO Ivan Espinosa has said the Japanese company will drop its long-term policy of creating products\u00a0in Europe for Europe.\u00a0Instead it will lean on models developed for its three core markets of China, the US and Japan.<\/span><\/p>\n \u201cThe competition is getting more and more severe with Chinese players,\u201d Espinosa told the Financial Times conference. \u201cTraditionally we were investing a lot on specific products for Europe. With the scale that we have, it has proven not sustainable.\u201d<\/p>\n Asked by Autocar whether its Chinese partnerships might provide the next platform for its\u00a0European models, Espinosa said Nissan \u201ccould consider doing something with what we’re creating in China\u201d.<\/p>\n Another possibility is leaning further on its Alliance partner Renault, which is developing a new EV platform with range-extender options due to land in 2028 and already builds the Nissan Micra<\/a> on the Renault 5 platform.\u00a0<\/p>\n \u201cIt’s a very good win-win case, because Nissan doesn’t have to invest on its own on creating a product. With a fraction of the investment, we can get access to a competitive product,\u201d\u00a0<\/p>\n Honda is another Japanese company turning to Chinese partners to develop models, rather than just manufacturing them.<\/p>\n Global car makers operating in China are already increasingly using electrified platforms and associated technology from their Chinese partners, among them Audi, Mazda, Nissan, Toyota,\u00a0Volkswagen<\/span>\u00a0and Volvo.<\/p>\n \u201cSpecial products for China would be almost impossible for us to develop by ourselves,\u201d Volvo\u2019s Samuelsson said.<\/p>\n