BYD weighs European factory takeover

BYD is exploring talks with Stellantis and other European carmakers over underused plants, marking a potentially significant step in the Chinese group’s push to localise electric vehicle production in one of the world’s most contested auto markets.

The discussions, disclosed by BYD executive vice-president Stella Li, include possible deals for factories in countries such as Italy, where established manufacturers are grappling with weak demand, high production costs and surplus capacity. BYD’s preference is to control any acquired or leased facility directly rather than operate through a joint venture, reflecting its long-standing strategy of keeping tight command over manufacturing, supply chains and product quality.

The talks come as BYD accelerates its European expansion while facing tariff pressure on China-built electric vehicles. The company has already committed to a major passenger car plant in Szeged, Hungary, and a separate investment in Turkey, both intended to give it a stronger regional production base. A takeover of an existing European factory would shorten the time needed to scale output, provide access to trained labour and suppliers, and help reduce exposure to import duties.

Stellantis is under particular pressure to address surplus capacity across its European operations. The group, which owns Peugeot, Citroën, Fiat, Opel, Jeep and Alfa Romeo, has been reviewing options for plants it may sell, share or repurpose as it adjusts to slower demand for some combustion-engine models and the uneven pace of electric vehicle adoption. Facilities in France, Spain and Italy have been discussed in connection with broader restructuring options, although no final decisions have been announced.

For BYD, taking over a plant would represent more than a real estate transaction. The company has become the world’s largest seller of electrified vehicles by combining battery production, vehicle assembly and software integration within a tightly managed system. Its blade battery technology, lower-cost platforms and rapid model rollout have allowed it to compete aggressively in China and expand into markets including Europe, Southeast Asia, Brazil and the Middle East.

European regulators have sought to protect domestic manufacturers from what they view as unfairly priced China-built electric vehicles, imposing additional duties after an anti-subsidy investigation. BYD faces one of the lower extra tariff rates among major Chinese exporters, but local production would still strengthen its commercial position. Cars assembled inside the region could ease political pressure, improve delivery times and help the company qualify for procurement rules and consumer incentives tied to regional manufacturing.

The move also highlights a broader shift in Europe’s auto industry. Legacy manufacturers have invested heavily in electrification but continue to face high labour costs, softer demand in several markets and intense competition from Chinese brands. Several groups are now open to partnerships that would have seemed unlikely a few years ago, especially where such arrangements can keep factories active and preserve employment.

Stellantis has already deepened its relationship with Leapmotor, the Chinese electric vehicle maker in which it holds a strategic stake. Their European production plans are designed to bring lower-cost electric models to market more quickly while using existing Stellantis assets. That arrangement shows how carmakers are increasingly weighing pragmatic industrial alliances against traditional concerns over technology transfer and brand competition.

BYD’s approach appears more independent. Stella Li has indicated that the company is open to cooperation in batteries and technology, but less inclined to share control of production. That stance could complicate negotiations with European groups and governments, which may seek assurances on jobs, supplier commitments and long-term investment before approving any transfer of strategically important industrial assets.

Italy is likely to be closely watched in any talks. The country has pushed for higher domestic vehicle production and has been courting manufacturers capable of raising factory utilisation. Any deal involving a Stellantis-linked site would carry political sensitivity because of the group’s deep industrial roots and the employment tied to its supply chain.

Labour standards could also become a central issue. BYD’s Hungarian project has drawn scrutiny over conditions at construction sites, including concerns about subcontracting, working hours and the treatment of migrant workers. The company has said compliance with local and European rules is required across its operations, but expansion through established plants would place it under sharper examination from unions, regulators and municipal authorities.