Vauxhall owner in talks with Chinese rival for European EV battery factory

Howard Mustoe
Tue, 21 November 2023 

A Vauxhall Combo Electric van at Ellesmere Port, the UK's first electric vehicle-only manufacturing plant - Getty Images

Vauxhall owner Stellantis is in talks with a Chinese battery-maker to build a European factory for car cells, in spite of warnings by its chief executive over the threat of Beijing’s dominance in the motor industry.

Stellantis is in negotiations with CATL, the world’s biggest maker of batteries for electric vehicles (EVs), over a joint venture to make cheaper power cells, which Carlos Tavares, the Stellantis chief executive, hopes will help lower car prices.

The deal comes months after Mr Tavares warned of an “invasion” of cheap Chinese cars into Europe and predicted a “terrible fight” between domestic manufacturers and Asian rivals.

Up to 30 new EV brands are eyeing up the UK car market, most of them Chinese.

Companies such as BYD and Ora, which already have agreements in place with UK dealers, will be joined by a raft of other car makers including Chery, Dongfeng and Haval.

Mr Tavares said: “CATL is the industry leader in this sector and together with our iconic vehicle brands, we will bring innovative and accessible battery technology to our customers while helping us achieve our carbon net zero ambition.”

The deal would focus on making lithium iron phosphate batteries, which are cheaper to manufacture than the current generation of cells made for Stellantis vehicles, and have a long life and better stability.

Last month Stellantis bought a 21pc stake in a Chinese EV company to benefit from what its chief executive called the “Chinese offensive”.

The European carmaker agreed to invest €1.5bn (£1.3bn) in Hangzhou-headquartered Leapmotor, an eight-year-old EV manufacturer.

Mr Tavares told reporters at the time: “The Chinese offensive is visible everywhere.”

However, he said the Leapmotor deal meant “we can be benefitting from this Chinese offensive, rather than being a victim”.

Chinese carmakers have been ramping up exports to Europe in order to boost sales as the local economy slows.

EVs produced in China are much cheaper than European competitors because they benefit from state subsidies and a rich supply of locally made batteries.

In September, Brussels launched an investigation into Chinese EV imports, with European Commission chief Ursula von der Leyen claiming prices were “kept artificially low by huge state subsidies”.

Stellantis’ big European rival Volkswagen last month said it would deepen cost cuts as demand for its cars falls in China, its biggest market, and Europe.

Robin Zeng, chairman and general manager of CATL, said: “We will remain dedicated to delivering more competitive and sustainable solutions for our partners to promote global energy transition.”