Stellantis Embraces Chinese EV Mindset

By Nick Carey, Nora Eckert, and Joseph White

LONDON/DETROIT (Reuters) – Stellantis (NYSE:STLA) seeks to adopt the low-cost mindset of Chinese EV manufacturers, despite tariffs from the European and U.S. governments that CEO Carlos Tavares criticizes as anticompetitive. The world’s fourth-largest automaker must navigate these trade barriers to succeed.

Tavares labels tariffs a “trap,” stating they impede legacy carmakers by shielding them from the reality that Chinese rivals produce electric vehicles for about one-third less.

He suggests the best approach is to “try to be Chinese ourselves,” a philosophy that led to Stellantis purchasing a 21% stake in Chinese EV maker Leapmotor (HK:9863) last October. The partnership facilitates access to Leapmotor’s technology and exclusive rights to manufacture its EVs outside China.

While Stellantis faces similar challenges as other automakers in the EU and U.S. competing with Chinese brands, it has established partnerships with Chinese companies to remain competitive. Stellantis is currently manufacturing Leapmotor EVs at its Tychy plant in Poland, alongside Fiat, Jeep, and Alfa Romeo models.

Tavares mentions the possibility of producing Leapmotor EVs in North America, but differing regional approaches towards Chinese EV technology complicate the strategy. Chinese EVs are already in the European market, and many factories are receiving subsidies to expand.

European automakers are beginning to adopt Chinese technology, with Volkswagen (ETR:VOWG_p) buying a stake in China’s Xpeng (NYSE:XPEV) to collaboratively develop economical EVs for the Chinese market. Many auto industry experts see partnerships with Chinese firms as a potential model for future automotive collaborations.

However, such partnerships in the U.S. are more challenging due to a 100% tariff on Chinese-made EVs and a focus on domestic production driven by the $430 billion Inflation Reduction Act. The U.S. government’s current proposal seeks to prohibit Chinese software and hardware in vehicles on American roads, potentially presenting another obstacle for Chinese EVs.

Stellantis could, in theory, manufacture Leapmotor EVs at U.S. plants—but with the need for non-Chinese components and higher U.S. wages, any savings might be insignificant. The primary concern for Stellantis is the political landscape, illustrated by criticisms from U.S. Republican Senator Marco Rubio regarding a Ford battery plant in Michigan using licensed technology from Chinese company CATL.

The contrasting approaches between the U.S. and Europe underscore the complexities of trade strategies, creating divisions among automakers. While some industry leaders advocate for tariffs, arguing they provide a temporary respite for U.S. manufacturers to catch up with Chinese competitors, others, like Tavares, challenge the necessity of such protective measures.

BMW (ETR:BMWG) CEO Oliver Zipse argues that a trade war with China would be detrimental for Europe, which relies on Chinese resources for electric vehicle production. Ford’s Farley contends that tariffs can help level the playing field, granting U.S. automakers a brief opportunity to enhance their competitiveness.

Industry experts continue to assert that China’s EV sector will emerge as a global powerhouse, advocating for the need for U.S. protectionism, especially in light of two European Commission reports revealing extensive government support for Chinese EV production.

The EU has suggested tariffs up to 35.3%, yet it cannot completely block Chinese automakers due to a collective set of rules governing trade within the 27-country bloc. A European Commission spokesperson expressed the need to maintain open competition, albeit under fair terms.

Andy Palmer, former COO of Nissan and current chairman of Slovak battery maker InoBat—partly owned by China’s Gotion High-tech—asserts that a balanced approach is essential to bringing Chinese companies into local production.

Stellantis’ Tavares argues that tariffs undermine exports and discourage price reductions, reinforcing the argument that protection can lead to complacency. Instead, Stellantis is focusing on more affordable models, like the forthcoming Citroen e-C3 priced at 20,000 euros ($21,342) and the Leapmotor EVs, in order to compete effectively.

Despite some automakers reconsidering their electrification goals, Stellantis maintains its target of 100% EV sales in Europe and 50% in the U.S. by 2030.

Moshiel Biton, CEO of Israeli battery materials company Addionics—planning a $400 million U.S. factory for cathode materials—stressed that legacy manufacturers must innovate instead of merely imitating Chinese architecture. He warned that without innovation, they risk stagnation in the competitive EV landscape.