Europe’s carmakers look east for lessons in EV race

Europe's two automotive giants, Volkswagen and Stellantis, have signaled renewed confidence in electric vehicles (EVs) at this year's Paris auto show. Drawing inspiration from their Chinese counterparts, the two companies are undergoing strategic overhauls to fend off growing competition from Chinese rivals in the European market.

Stellantis CEO Antonio Filosa revealed that the French-Italian automotive group is learning from its joint ventures with Leapmotor and Dongfeng to study the Chinese competitive edge on technology. Filosa explained that by working together and pooling engineering teams, the companies can identify where the Chinese competitors' strengths lie and learn from them.

The European shift towards EVs has been accelerated by rising fuel prices and more affordable models, including those from Volkswagen and Stellantis. Both companies are struggling to defend their market share against rapidly expanding Chinese players. Stellantis CEO Danilo Annese noted that the BEV is gaining traction in countries like Italy and Spain, where adoption has been slower than expected.

Stellantis has entered a production tie-up with Chinese EV maker Leapmotor and plans another with Dongfeng. These partnerships aim to satisfy upcoming Made in Europe regulations and capitalize on the Chinese rivals' technological advancements. Leapmotor's CEO, Danilo Annese, stated that the joint venture with Stellantis is seeing remarkable speed, with a mid-sized electric SUV being developed in just two years.

Volkswagen, too, has been heavily influenced by China, with its CEO, Oliver Blume, referring to it as a "fitness centre for the industry." However, the effects of China's influence on Volkswagen's European operations have been limited. While Volkswagen is partnering with Chinese players like Xpeng primarily in the Chinese market, cooperation in Europe remains largely untested.

Stellantis' partnership with Leapmotor could also pose risks for Volkswagen, as it may help Chinese rivals localize production in Europe and comply with regulations designed to protect European automakers. Nonetheless, both Volkswagen and Stellantis emphasize that they do not see a need for Chinese joint ventures in Europe at the moment, preferring to focus on their own growth opportunities.