Automotive company Stellantis teams up with battery supplier CATL and electric automaker Leapmotor to produce electric vehicles in Europe
In a strategic move to bolster its presence in the European electric vehicle (EV) market, Stellantis, the multinational automaker behind brands like Fiat, Chrysler, and Jeep, is partnering with Chinese EV startup Leapmotor and battery manufacturer CATL. This alliance aims to produce EVs and batteries in Europe, addressing the cost-competitiveness gap between European and Chinese players.
The joint venture with Leapmotor is set to debut in nine European countries, including Germany, starting in September. Stellantis' limited presence in the Chinese market allows it to pursue partnerships with Chinese players, a move that could potentially revolutionise the European EV landscape.
Carlos Tavares, CEO of Stellantis, expressed concerns about the cost-competitiveness of European players in the face of less expensive Chinese EVs entering Europe using in-house technologies. To level the playing field, Stellantis is revising its battery production plans to make better use of CATL's expertise. This includes potentially producing Lithium Iron Phosphate (LFP) batteries at sites originally planned for lithium-ion batteries.
LFP batteries are relatively inexpensive to produce and a key factor in the cost-competitiveness of many Chinese EVs. The partnership with CATL is part of a growing competition on EV prices, with Stellantis recognising a 30% cost-competitive edge of Chinese players against the Western world.
Stellantis' strategy is to be "offensive" and "surf the wave of the Chinese offensive in the EV market," as stated by Tavares. The automaker is working to cut costs and is on track to achieve its goal of reducing annual costs by EUR 5 billion (USD 5.39 billion) a year ahead of schedule in 2024.
The European Union has announced additional tariffs of up to 38% on Chinese EV imports due to unfair subsidies from Beijing. However, Tavares questions whether these tariffs can correct the cost-competitiveness gap between European and Chinese players.
In a bid to avoid these duties, Stellantis aims to boost European output, leveraging Chinese cost-competitiveness. The joint venture with Leapmotor initially planned to produce models like the T03 in Poland, but due to political pressure and tariffs, production was halted. Spain is now being considered as a new manufacturing location.
Stellantis held its inaugural investor day in Michigan on June 13, where Tavares outlined the strategy. The new facilities for lithium-ion batteries in Germany and Italy, originally planned by Stellantis' joint venture with Mercedes-Benz and others, are currently suspended while Stellantis considers producing LFP batteries at those sites instead.
This article was first published on Nikkei Asia and is part of 36Kr's ongoing partnership with Nikkei. The competition in the EV market is heating up, and Stellantis' strategic moves signal a shift in the industry's dynamics.
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