BYD Negotiating with Stellantis and Other European Car Makers for Idle Factories

According to Bloomberg, BYD is in talks with Stellantis and other European car manufacturers about taking over underutilized factories in the region. BYD's Executive Vice President Stella Li stated during her attendance at the Financial Times Future of the Car conference in London on Wednesday that the negotiations involve factories in countries like Italy, and the company is looking to tap into any available production capacity in Europe.

Taking over existing production capacity typically enables faster manufacturing capabilities compared to building new factories, and it allows for the utilization of idle resources released by European car manufacturers amid low demand. Stella Li noted that the company prefers to operate factories independently rather than through joint ventures, which implies that the focus of potential deals would be on obtaining more direct control over European production.

The driving force comes from both ends: the price war in the Chinese market squeezes profit margins, and the increase in BYD's European sales volume raises the need for local production. European car manufacturers are also seeking new ways to absorb their production capacity. Stellantis had earlier this month announced plans to strengthen cooperation with Zero Run Auto in Europe and produce electric vehicles for Zero Run at two of its Spanish factories.

Changes are also occurring on the demand side. Bloomberg states that the rise in fuel prices following conflicts in the Middle East has redirected market focus towards electric vehicles, providing a more favorable demand backdrop for BYD's expansion in Europe.

BYD is also reinforcing its high-end brand layout in Europe. Bloomberg previously reported that the company is hiring talent from competitors to support the development of its brand, Denzel, in Europe, which plans to launch in the UK later this year.