- FAW Hongqi is in talks with Stellantis to utilize its Spanish plant to accelerate European expansion.
- The potential tie-up is facilitated by Leapmotor, in which both companies have invested.
Chinese luxury auto brand FAW Hongqi is in talks with European carmaking giant Stellantis to use the latter's plant in Spain for localized production, Reuters reported on Tuesday, citing five people familiar with the matter.
The previously unreported production talks are being facilitated by Chinese EV maker Leapmotor, according to Reuters.
Both FAW Group and Stellantis are major investors in Leapmotor, and this cross-collaboration is expected to provide favorable conditions for Hongqi's rapid roll-out in Europe.
If an agreement is reached, Hongqi's models will be assembled and produced at Stellantis's Zaragoza plant in Spain, Reuters said.
This would help Hongqi save hundreds of millions of dollars in new factory investments and support its ambitious plan to launch more than 15 new energy vehicle (NEV) models in Europe by 2028.
For Stellantis, bringing in a Chinese manufacturing partner could significantly lower operating costs and effectively boost capacity utilization at its underused European plants.
The company has been steadily expanding its network of alliances with Chinese automakers. In mid-April, it held in-depth discussions with Dongfeng Motor regarding similar collaborations, including sharing European factories, according to a Bloomberg report earlier this month.
Hongqi's overseas expansion plan is not an isolated case. Chinese automakers, including Changan and Dongfeng, are actively expanding into key overseas markets such as Europe.
Faced with increasingly fierce market competition and trade barriers, setting up factories within the European Union for localized production has gradually become a viable path for Chinese automakers going global.
In October 2023, Stellantis invested 1.5 billion euros ($1.76 billion) to acquire an approximate 20% stake in Leapmotor, becoming the Chinese EV maker's largest outside shareholder.
Last December, FAW invested in Leapmotor, securing a 5% stake.
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