European automakers mired in difficulties are turning their attention to China, seeking support in technology, capital, and production capacity. Stellantis and Mercedes-Benz have successively reported discussions with Chinese car companies about potential collaborations, reflecting the strategic restructuring of the European automotive industry under the pressure of electrification transformation.
According to Bloomberg, Stellantis executives have held talks with Xiaomi and XPeng to discuss various options for restructuring its European operations, including the acquisition of Maserati or other brand equity by Chinese car companies, as well as opening European manufacturing capacity to Chinese partners. Meanwhile, Mercedes-Benz has held preliminary talks to deepen cooperation with Geely, aiming to strengthen its vehicle development capabilities in China, the largest market.
These developments indicate that Chinese car companies are transforming into strategic partners that traditional European automakers are eager to court. Reports citing informed sources indicate that there is currently no certainty of any deals being finalized, but the negotiations themselves clearly reveal a structural shift in the technological leadership of the European automotive industry.
<h2>Stellantis Under Pressure in Europe, Seeking &#34;Blood Transfusion&#34; from Chinese Capital</h2>
Stellantis's strategic dilemma is evident in its latest financial data. The company recently announced record impairments and write-offs totaling €22.2 billion (approximately $25.7 billion), most of which are related to its shrinking electric vehicle strategy, including the cancellation of battery joint ventures and several future models.
Operationally, Stellantis's European plants are only utilizing 46% of their capacity, with its brands such as Fiat, Opel, and Peugeot facing challenges in the European market—competing against traditional rivals like Volkswagen and Renault while also enduring the continuous encroachment of Chinese brands like BYD. Currently, for every 10 cars sold in the European market, one is from a Chinese brand.
Reports citing informed sources indicate that Stellantis's management believes that higher investment returns in the future will come from the U.S. market and is cautious about making large-scale investments in Europe. In the U.S., the company is advancing a new model investment plan of about $13 billion, with demand for brands like Jeep and Ram pickups showing some recovery. Bringing in investments from Chinese car companies for its European operations could provide Stellantis with advanced electric vehicle technology and software capabilities, while Chinese car companies could gain better access to the European market.
In response to speculation about splitting its U.S. and European operations, Stellantis issued a strong statement, asserting that &#34;the claim that the company is considering a split plan is baseless.&#34; Current CEO Antonio Filosa is expected to disclose more details about future plans on May 21 at the U.S. Investor Day.
<h2>Multi-Track Advancement, Cooperation with Chinese Car Companies Gradually Forming a System</h2>
In addition to engaging with Xiaomi and XPeng, Stellantis is also advancing cooperation with Chinese car companies along multiple lines. According to Bloomberg, the company is considering deepening cooperation with its existing Chinese partner Leapmotor, as both parties are exploring the potential for collaboration in electric vehicles aimed at the European market in the fields of electrification and software technology.
Currently, Stellantis has been selling Leapmotor vehicles through its European dealer network, and Leapmotor has also stated that it is &#34;actively exploring&#34; cooperation with this Franco-American merged automaker in the fields of complete vehicles and components.
The contact between Mercedes-Benz and Geely focuses on the development of models for the Chinese market, which is in line with Volkswagen's previous collaboration with XPeng to launch models that better cater to local Chinese tastes. Renault is also collaborating with Geely in South Korea and Brazil, leveraging Chinese components to develop a pure electric Twingo model priced below 20,000 euros.
The common logic behind the aforementioned cooperation model is: Chinese automakers can typically bring new cars to market at twice the speed of their European counterparts, dominate the electric vehicle sector, and continuously expand their market share in Europe. For traditional European automakers, collaborating with Chinese partners has gradually evolved from an option to a realistic path to maintain competitiveness.
<h2>Short-term Resolution of Europe's Overcapacity Crisis is Difficult</h2>
The structural dilemma of the European automotive industry provides a deeper background for the aforementioned cooperation negotiations. According to Bloomberg, European automakers are facing a severe overcapacity crisis, and union resistance and political pressure make it nearly impossible to close factories—Volkswagen ultimately replaced its factory closure plan with the reduction of tens of thousands of jobs, which is a typical case.
Analysts expect that, influenced by global trade frictions and weak demand, the difficulties faced by the European automotive industry will further intensify in the next six to nine months, with many factories continuing to operate at levels far below their potential capacity.
In this context, attracting investment from Chinese automakers or taking over some European capacity is not only a realistic way for pressured companies like Stellantis to alleviate overcapacity but also a shortcut to acquiring electrification technology

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Faced with the pressures of electrification transformation and the dilemma of overcapacity, European automakers are accelerating their "embrace of China." Stellantis is in talks with Xiaomi, XPeng, and Leapmotor to explore cooperation possibilities such as equity sales and capacity sharing; Mercedes-Benz is seeking to deepen its cooperation with Geely to strengthen vehicle development in China. Stellantis' European plants have an utilization rate of only 46%, recently recording a massive write-down of €22.2 billion. Chinese automakers, leveraging their speed and cost advantages in electrification, are becoming strategic partners that European giants are eager to court

- European automakers are looking to China for technological and capital support amidst challenges in electrification strategies.  
- Stellantis has held talks with Xiaomi and XPeng to consider restructuring its European operations, while Mercedes-Benz is deepening cooperation with Geely to enhance model development in China.  
- These partnerships indicate a shift towards Chinese companies becoming strategic allies for traditional European automakers facing capacity excess and competitive pressures.

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European car manufacturers begin to "embrace China": Under pressure from technology and costs, Stellantis and Mercedes-Benz are seeking cooperation with Chinese car companies