Italy is in talks with China’s Chery about a car factory

The Italian government is in talks with China’s Chery Auto to bring another major carmaker into the country alongside Stellantis and increase national car production, two sources told Reuters.

Rome wants to increase Italy’s national car production from less than 800,000 cars in 2023 to 1.3 million cars a year and is already in talks with Stellantis – the country’s only major car maker – to increase the group’s production by up to one million units. per year. at the end of this decade, the number was last reached in 2017.

Industry Minister Adolfo Urso said Italy wanted a second manufacturer that would increase national production by around 300,000 vehicles.

If the talks are successful, Chery will be one of the first Chinese manufacturers to have a European production presence, which would increase competition with local manufacturers, especially in the electric vehicle (EV) segment.

Urso said last month that Italy held talks with Tesla and three unnamed Chinese automakers, whose representatives visited Italy last year to explore potential investment opportunities.

One of the two sources said Chery was the option Roma were “gambling the most” at the moment.

A spokesman for Italy’s Industry Ministry declined to comment.

Chery Europe chief executive Jochen Tueting told Reuters the Chinese carmaker expects sales in Europe to be high enough to support the domestic assembly plant.

“We are exploring various opportunities across Europe to find the possibility of establishing local factories for the future,” Tueting said.

“We are currently in discussions about several locations in Europe,” he added, but said he could not comment on specific locations due to confidentiality agreements.

The sources, one from the industry and one from the government, did not want to be named because the discussions are confidential.

An industry source said Chery was considering renovating an existing plant or building a new plant in Italy, but was also exploring other options in Europe, including Nissan’s former factory in Barcelona.

A government source said Great Wall Motor was also among the Chinese automakers that contacted Rome and had visited Italy.

Great Wall Motor did not respond to a request for comment.

PRICE WARS AND GREAT TENSIONS

Among the car manufacturers in contact with Italy is Chinese EV giant BYD.

But BYD, which late last year overtook Tesla as the biggest EV company by sales, said in December that it would build its first European factory in Hungary.

The company has not commented on whether it has plans for a second facility in Europe.

In addition to the fierce price war rocking the electric car industry, there is growing trade tension between China and the European Union, which is investigating whether Chinese electric car makers are benefiting from unfair government subsidies.

Building production capacity in Italy or Spain, where sales of electric vehicles are low compared to other countries, would suit Chery’s strategy of selling a mix of combustion engines, hybrids and fully electric vehicles, the source added to the industry.

The company is launching its Omoda and Jaecoo brands in all major European markets. By the end of 2025, Chery plans to have three SUV models for each brand with different fuel combinations to serve different parts of Europe. Sales of electric vehicles are higher in northern Europe than in southern markets. (Reporting by Giulio Piovaccari in Milan, Giuseppe Fonte in Rome, Nick Carey in London; Editing by Giulio Piovaccari; Editing by Barbara Lewis)