European automotive companies are increasingly collaborating with Chinese EV manufacturers to leverage underutilized production facilities and bolster local supply chains. This trend is driven by a significant decline in European car production, with a 6.2% fall in 2024 to 11.4 million vehicles, followed by a further 2.8% decrease in the first half of 2025. This downturn has led to substantial job cuts, with automotive suppliers announcing 104,000 job losses across 2024 and 2025.
These partnerships include Stellantis's joint venture with Dongfeng in Europe, Ford's agreement to collaborate with Geely at a Spanish plant, and Volkswagen's discussions with Xpeng regarding the potential use of VW's excess factory space in Europe. Xpeng, which already has Magna Steyr assembling its cars in Austria using Chinese kits, is keen on full-scale manufacturing in Europe through a joint venture. Similarly, SAIC plans to build its first EU car factory in Galicia, Spain, while Stellantis is pursuing a joint venture with Leapmotor for EV production and with CATL for lithium-ion cells near Zaragoza.
These collaborations come amidst rising competition from China, which surpassed the EU as the world's largest car exporter in 2024. Chinese vehicles accounted for 17% of the total value of cars imported into the EU and 7% of total EU car sales last year. In the EV sector, Chinese manufacturers represented 20% of BEV sales and 12% of plug-in hybrid sales. Despite the EU imposing anti-subsidy duties of up to 35.3% on Chinese BEVs, the partnerships are seen by some, like Renault CEO François Provost, as increasingly difficult to avoid, highlighting the blurring lines of origin for cars built in Europe.
