Stellantis (NYSE:STLA) is exploring a potential partnership with Dongfeng Motor that could involve joint vehicle production across Europe and China, according to a report by Bloomberg.
Sources cited by the publication indicate that discussions are focused on allowing Dongfeng to use underutilized Stellantis manufacturing sites in Europe, while the Chinese automaker could produce certain Stellantis brands within China. Representatives from the state-owned group have recently toured facilities in Germany and Italy, with talks also covering the possibility of future investment or partial acquisition of selected European plants.
Negotiations remain ongoing and may not lead to a final agreement, according to the same sources.
In Milan trading, Stellantis shares were up 0.80% after two hours, reaching €7.105, outperforming a modest 0.20% gain in the FTSE MIB index.
A renewed collaboration would build on a long-standing relationship dating back to the early 1990s, when PSA Group—now part of Stellantis—formed a joint venture with Dongfeng to enter the Chinese market. That partnership has weakened in recent years amid declining volumes and intensifying competition.
“Dongfeng and Stellantis have a solid foundation for a partnership, and we will continue to build on their complementary strengths in the future,” the Chinese explained, adding that China offers vast opportunities for growth and collaboration for the European automaker, Les Echos reported.
The potential deal reflects Stellantis’ broader strategy to strengthen its position as it faces shifting demand patterns and growing competition from major players such as Volkswagen and BYD.
Bloomberg previously reported that Stellantis executives have also held discussions with Chinese companies Xiaomi and Xpeng regarding possible restructuring initiatives. While no agreements have been finalized, sources suggest the group could pursue partnerships with multiple Chinese manufacturers.
Stellantis is already working with Leapmotor to expand sales in Europe and is considering further integration of the partner’s technology to support its mass-market brands, including Fiat and Opel.
“As part of its normal business, Stellantis engages in discussions with various industry players around the world on various topics, always with the ultimate goal of offering customers the best mobility options,” Stellantis said in a statement, declining to comment further.
Analysts at Equita noted that talks appear to be progressing, maintaining a hold rating on the stock with a €7.90 price target. “We believe that negotiations are effectively underway,” they said.
For Equita, “if some of the negotiations reported in the media were to succeed, the potential advantages are clear, which should be evaluated based on the scope/extent of the agreements,” particularly “the reduction of R&D and capex costs, the improved use of European production capacity, currently heavily underutilized (perhaps avoiding the need to close plants, avoiding the resulting socio-political complications and related costs), the acceleration of time-to-market for new products, increased penetration of the Chinese market (which currently represents only 1% of total volumes), and cash-in in the event of asset disposals.”
“However,” Equita concludes, “facilitating/accelerating the establishment of Chinese manufacturers in Europe could, in the medium term, lead to a further intensification of competition in the old continent (by removing the potential shield of tariffs), where pressure is already high due to the numerous new models imported from China that are progressively gaining market share.”