Chinese Automakers Accelerate European Expansion: From OEM Partnerships to Full-Scale Overseas Manufacturing

Multiple Chinese automakers are accelerating their entry into the European market through comprehensive strategies spanning sales, manufacturing, and R&D. Dongfeng Motor Corporation and Stellantis Group have signed a memorandum of understanding to establish a joint venture in Europe, with Stellantis holding a 51% stake and Dongfeng holding 49%. The JV plans to produce Dongfeng’s new energy vehicles (NEVs) at Stellantis’ existing plant in Rennes, France, while leveraging Dongfeng’s ecosystem for joint procurement and engineering development. This collaboration aims to utilize Stellantis’ underutilized capacity while enabling Dongfeng’s self-owned brands to test the European market. By May 2026, automakers including XPeng, Chery, BYD, and Leapmotor will have established production footprints in Europe through contract manufacturing or shared capacity arrangements. Geely has already completed a factory acquisition, BYD is negotiating to acquire a local idle facility, and Hongqi also plans to produce NEVs using Stellantis’ plants. Industry analysts note that while contract manufacturing or shared capacity models entail lower initial costs, they tend to encounter production bottlenecks once annual sales exceed 50,000 units, making acquisitions or greenfield investments essential for long-term growth. Competition has now evolved from “local sales” to “local manufacturing,” with the next stage focusing on localized supply chains. Geely has strengthened its global supply chain capabilities through acquisitions and integration, while BYD relies on self-built capacity to ensure cost control and supply chain security. Some Chinese automakers have already set up R&D centers in Europe to drive localization of data and standards. However, international expansion carries hidden cost risks: asset-light models may see rising costs as scale increases, while asset-heavy investments face significant sunk-cost risks. As a large number of Chinese automakers flood into Europe, risks such as overinvestment, price wars, and the elimination of outdated capacity could emerge. Against the backdrop of weak domestic consumer demand, overseas markets have become a critical outlet. Companies are generally adopting a cautious “contract manufacturing/shared capacity” approach initially, followed by bolder moves toward “self-built or acquired” facilities. Ultimately, success will hinge on their ability to meet European consumers’ subjective perceptions of product value with low cost and high efficiency.