Stellantis will manufacture electric vehicles for Dongfeng at its French facility.

Stellantis will establish a joint venture with China's Dongfeng to manufacture and market Dongfeng vehicles in Europe.

The Stellantis-led joint venture, with a 51/49 ownership structure, will oversee the production, engineering, procurement, and sales of Dongfeng vehicles across Europe, as stated in a recent announcement.

The partners also plan to localize production of new energy vehicle models from Dongfeng at a Stellantis facility in Rennes, France, in accordance with Made-in-Europe regulations.

Manufacturing Dongfeng vehicles in France will enable the company to circumvent European Union tariffs on battery-electric vehicles made in China.

Historically, the Rennes plant produced over 400,000 vehicles a year on three assembly lines during the early 2000s, but underwent restructuring in the 2010s and currently produces only the Citroen C5 Aircross SUV on a single line.

Dongfeng is relatively new to the European market, having sold 1,479 vehicles in the region in the first quarter, according to Dataforce market analysts.

This new joint venture is an extension of a recently announced agreement where Dongfeng will manufacture Jeep and Peugeot vehicles in China.

The collaboration positions Stellantis as a leader in encouraging traditional automakers to utilize underused factories in Europe for Chinese manufacturers.

Chinese companies like Chery are actively pursuing opportunities to rent excess factory space from European automakers as a fast track to production in the region. Magna Steyr is already building vehicles for Xpeng and GAC at a facility in Graz, Austria.

As Chinese automakers face intense price competition in their home market, they are rapidly expanding to boost sales and profits.

Qing Yang, chairman of Dongfeng, stated that the new European joint venture will facilitate the automaker's global growth.

During the Beijing auto show last month, Dongfeng announced a goal of achieving global sales of 4 million vehicles by 2030, with over 40 percent expected to come from international markets.

Earlier this month, Stellantis revealed a partnership with Chinese firm Leapmotor to co-manufacture vehicles in Spain. The two companies formed a joint venture in 2023, with Stellantis holding a 51 percent share.

Volkswagen Group is also considering sharing its European manufacturing capacity with Chinese automakers.

Stellantis is set to host a capital markets day on May 21, where CEO Antonio Filosa is anticipated to present strategies for reclaiming market share in North America and Europe.