Automotive giant Stellantis, facing significant challenges, is reportedly in discussions with Chinese automakers to secure investment for its European operations. The move aims to gain financial, technological, and production capacity support in the European market, allowing Stellantis to concentrate its own investment focus on the Americas.

According to a Bloomberg report from March 12, Stellantis executives have held separate talks with Xiaomi Corp. and XPeng Inc. to discuss various plans for restructuring its European business. These options include the potential acquisition of equity stakes in Maserati or other Stellantis brands by the Chinese automakers, as well as opening up European manufacturing capacity to Chinese partners.

The report notes that sources familiar with the matter indicated there is no certainty any deal will be finalized. Following the news, the US-listed ADRs of XPeng Inc. rose as much as 5.5%, shares of Xiaomi Corp. gained 2%, and Stellantis NV's stock pared its losses.

Analysts suggest the negotiations highlight the starkly divergent trajectories of Stellantis's American and European business segments. This also signals a profound strategic reassignment for the automaker, which was formed from the merger of Fiat Chrysler and PSA Group in 2021.

Stellantis's European operations are under long-term pressure from overcapacity, intense competition, and the high costs associated with the transition to electric vehicles. Brands like Fiat, Opel, and Peugeot are squeezed in the European market, contending with traditional rivals such as Volkswagen and Renault while also facing ongoing encroachment from Chinese brands like BYD. Currently, one out of every ten cars sold in Europe originates from a Chinese brand.

The recent Bloomberg report, citing informed sources, stated that Stellantis management believes future higher investment returns will come from the US market and is cautious about making substantial additional investments in Europe. Meanwhile, bringing in Chinese automakers as investors for its European business could provide Stellantis with advanced electric vehicle technology and software capabilities. In return, Chinese automakers would gain improved access to the European market.

Beyond the engagements with Xiaomi Corp. and XPeng Inc., Stellantis is pursuing cooperation with Chinese automakers on multiple fronts. A previous Bloomberg report indicated Stellantis is considering deepening its collaboration with existing Chinese partner Zhejiang Leapmotor Technologies, with both parties exploring potential synergies in electrification and software technology for affordable electric vehicles targeted at the European market.

In the US market, Stellantis is advancing an investment plan of approximately $13 billion for new models. Brands like Jeep and Ram pickup trucks have already shown preliminary benefits, with demand recovering.

Some sources indicated that this restructuring could ultimately lead to a further separation of Stellantis's American and European businesses, although a full spin-off is not currently a primary focus of discussions.

In response, Stellantis issued a strongly worded statement, declaring "in the strongest possible terms that it is not considering a spin-off plan and any assertion to the contrary is unfounded."

The backdrop to these talks is Stellantis's recent announcement of a record 22.2 billion euros (approximately $25.7 billion) in impairments and write-offs, largely linked to the company's decision to scale back its electric vehicle strategy. This strategic reversal—which included canceling battery joint ventures and several future models—wiped out about a quarter of the company's market value in a single day.

Current CEO Antonio Filosa, who took over last year, has been focused on stabilizing operations. Filosa is expected to disclose further details about the company's future direction during an Investor Day scheduled for May 21 in the United States.