PARIS: Stellantis NV plans to extend its cooperation with China's Leapmotor, including co-developing an electric model under the Opel brand, shifting ownership of a plant in Spain and expanding joint purchasing.
Opel engineers have already started working with their Leapmotor counterparts in China, the marque's Chief Executive Officer Florian Huettl said in an interview.
They're developing a mid-size sport utility vehicle that will be built in Zaragoza, Spain to compete with cars like Volkswagen AG's Tiguan and Hyundai's Tucson.
The move is one of the first instances of a major Western automaker relying on Chinese technology to bolster its lineup in Europe.
Production of the SUV could begin in 2028, the company said.
Separately, the sprawling carmaker, which also owns the Jeep, Ram and Peugeot brands, could transfer ownership of a site in Madrid to its venture with its Chinese partner.
Stellantis holds a 51% stake in the Leapmotor pact set up in 2023, which so far focused on distribution.
The shift at the Villaverde plant could pave the way for production of multiple Leapmotor models, helping the companies meet stricter European Union rules on local manufacturing, Stellantis said.
The EU is tightening rules on local content for electric vehicles alongside tariffs on Chinese imports, pushing automakers to localise production and secure lower-cost technology as competition intensifies.
The site could also produce Leapmotor models as early as 2026, while the partners deepen cooperation on purchasing to cut costs by combining China's EV supply chain strengths with European manufacturing.
The broadening of the partnership reflects mounting pressure on European carmakers to cut costs and speed up development as Chinese rivals expand in the region.
It also highlights a shift in Europe's auto industry, with manufacturers from China moving into core engineering after building a lead on EV technology and other software.
Renault SA's new electric Twingo city car, for instance, was developed in Shanghai.
Last week, VW's CEO Oliver Blume said he was open to sharing factories at its European plants with Chinese automaking partners.
Like Stellantis, the manufacturer is faced with underused factories in the region and saddled with high costs.
Leapmotor's team will take the lead on the SUV's electric drivetrain and battery systems, while Opel will have greater focus on design and driving dynamics.
The car is expected to take around 24 months to develop, a faster pace that reflects the speed at which Chinese manufacturers can create a new model.
"We plan to combine the hardware and software skills of both worlds to build a car Opel will manufacture in Europe," Huettl said.
The approach should result in a more affordable model than one developed solely in Germany, he said.
The move confirms a Bloomberg News report from earlier this year that Stellantis was considering ramping up its tie-up with Leapmotor to help lower costs across brands such as Opel.
The company also may ink more agreements with one or more Chinese manufacturers to address overcapacity in Europe, Bloomberg reported last month.
This week, Italian Industry Minister Adolfo Urso said he expects to share more details on the future of the distressed Cassino plant in central Italy soon.
He highlighted "potential production investments with international partners" to keep up utilization rates and employment.
The expanded partnership is part of a wide-ranging overhaul by Stellantis Chief Executive Officer Antonio Filosa and Chairman John Elkann, the results of which will be presented to investors later this month.
The company also may ink more agreements with other Chinese manufacturers to address overcapacity in Europe, Bloomberg reported last month.
The group recently also revived a partnership with Dongfeng Motor Corp in China.
Filosa told reporters earlier this month that he's not seeing signs of Leapmotor taking market share from other Stellantis brands, many of which compete for the same mass-market customers.
Founded as a sewing machine manufacturer in 1862, Opel has long been positioned as a German brand focused on practical engineering and affordable car-travel, making it a core pillar of Stellantis' European volume business alongside Vauxhall.
