3 European Auto Giants Consider Joining Forces To Tackle The Might Of Tesla And Chinese EV Rivals

European automotive giants Volkswagen AG VWAGY, Renault SA RNSDF, and Stellantis NV STLA are reportedly considering an unprecedented partnership to tackle the growing threat from Chinese EV makers and Tesla.

What Happened: As reported by Bloomberg on Monday, the automakers are exploring the idea of joining forces to produce affordable EVs, a move that would require them to set aside their historical rivalry.

The companies are facing increased competition from Chinese EV firms and Tesla, which has exposed their vulnerabilities. This has prompted a sense of urgency among European carmakers, who realize that the traditional approach is no longer viable.

Stellantis CEO Carlos Tavares highlighted the need for adaptation, warning of a potential “bloodbath” in the European auto industry if companies fail to keep up with Chinese competition.

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The European car industry is also grappling with a slowdown in EV adoption, caused by factors such as the reduction of government incentives, rising repair costs, and consumer frustration over climate policies affecting their finances.

Why It Matters: The European Commission has been scrutinizing Chinese EV manufacturers for potential unfair advantages due to state subsidies. The investigation, launched in October, aims to determine whether Chinese-made EVs are gaining an unfair advantage from state subsidies. The probe includes BYD Company, Geely Automobile Holding, and SAIC, among others.

Furthermore, the European Commission is considering imposing tariffs on Chinese EV imports, a move that could potentially benefit European automakers like Stellantis and Renault by reducing competition in the European market.

Earlier, it was reported that European automakers were forging partnerships with Chinese firms to gain a larger share of the world’s largest auto market. Volkswagen, for instance, partnered with Chinese EV startup XPeng in a bid to regain its foothold in China, where it has been losing ground to local EV manufacturers and Tesla.

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