European car manufacturers begin to "embrace China": Under technical and cost pressures, Stellantis and Mercedes-Benz are successively seeking partnerships with Chinese car companies.

``` European car manufacturers deeply mired in difficulties are turning their sights to China, seeking support in technology, capital, and production capacity. Recent news that Stellantis and Mercedes-Benz are in talks with Chinese car companies reflects a strategic restructuring of the European automotive industry under the pressure of electrification transformation. According to Bloomberg, Stellantis executives have held separate meetings with Xiaomi and Xpeng to discuss various options to reorganize their European operations, including the possible acquisition of Maserati or other brands under Stellantis by Chinese car companies, and opening European manufacturing capacities to Chinese partners. At the same time, Mercedes-Benz has held preliminary talks with Geely about deepening cooperation, aiming to strengthen its model development capability in China, the largest automotive market. These moves show that Chinese car companies are becoming strategic partners that European traditional automakers are eager to court. According to sources cited in reports, there is no certainty of any deal being finalized yet, but the talks themselves already clearly reveal a structural shift in Europe’s automotive technology leadership. Stellantis’ European operations under pressure, seeking Chinese capital ‘infusion’ Stellantis’ strategic dilemma is evident in its latest financial data. The company recently announced a record impairment and write-down totaling €22.2 billion (about $25.7 billion), most of which is associated with scaling back its electric vehicle strategy, including the cancellation of battery joint ventures and several future models. Operationally, the capacity utilization rate of Stellantis’ European factories is only 46%. Its brands such as Fiat, Opel, and Peugeot are beset by challenges in the European market—not only facing traditional rivals like Volkswagen and Renault but also under continuous encroachment from Chinese brands like BYD. Currently, one in every ten cars sold in Europe is from a Chinese brand. According to informed sources, Stellantis management believes that higher returns on investment will come from the US market in the future, and is cautious about making large-scale additional investments in Europe. In the US, the company is pushing forward a $13 billion new model investment plan, with renewed demand for brands such as Jeep and Ram pickup trucks. Bringing in Chinese car company investment into the European business could provide Stellantis with advanced EV technology and software capabilities, while Chinese car companies would gain better access to the European market. Regarding speculation on splitting up Europe and U.S. operations, Stellantis issued a strong statement saying, "We wish to state in the clearest way possible that any claim the company is considering a spin-off plan is unfounded." Current CEO Antonio Filosa is expected to reveal more details about future plans at the US Investor Day on May 21. Multi-pronged cooperation with Chinese car makers taking shape In addition to contacts with Xiaomi and Xpeng, Stellantis is advancing cooperation with Chinese automakers on multiple fronts. According to Bloomberg, the company is considering deepening cooperation with current Chinese partner Leapmotor, exploring possibilities for collaboration in electrification and software technology on affordable electric vehicles for the European market. Currently, Stellantis is already selling Leapmotor cars through its European dealership network, and Leapmotor has also stated it is “actively exploring” cooperation with this Franco-American-Italian merged automaker in both vehicle and parts sectors. Mercedes-Benz’s interaction with Geely, meanwhile, focuses on model development for the Chinese market, similar to Volkswagen’s earlier collaboration with Xpeng to launch models that suit Chinese tastes. Renault is also working with Geely in South Korea and Brazil and is leveraging Chinese components to develop the all-electric Twingo priced below €20,000. The common logic behind these cooperation models is that Chinese car companies are generally able to bring new models to market at twice the speed of their European peers, hold a dominant position in electric vehicles, and are continuously expanding their share in the European market. For traditional European car companies, cooperation with Chinese partners has evolved from an option to a realistic path to maintain competitiveness. Europe’s overcapacity crisis not easily resolved in the short term The structural difficulties of the European automotive industry provide a deeper backdrop for these cooperation negotiations. According to Bloomberg, European car manufacturers are facing a severe overcapacity crisis, and resistance from labor unions and political pressure make factory closures nearly impossible—Volkswagen ultimately replaced its plant closure plan with the elimination of tens of thousands of jobs, which is a typical case. Analysts expect that, affected by global trade frictions and weak demand, the difficulties of the European automotive industry will intensify over the next six to nine months, with many factories operating well below their potential capacity. Against this backdrop, bringing in Chinese car companies for investment or to take over part of Europe’s capacity is, for pressure-laden companies like Stellantis, both a practical solution to overcapacity and a shortcut to acquiring electrification technology. Risk Warning and Disclaimer The market has risks, and investment should be cautious. This article does not constitute individual investment advice and does not take into account the special investment objectives, financial situation, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article are suitable for their specific circumstances. Investing based on this is at your own risk. ```