Hongqi Discusses Production Cars at Stellantis Plant in Spain

According to Reuters citing informed sources, China's luxury car brand Hongqi is in talks with Stellantis to produce vehicles at the latter's factory in Spain. Should the negotiations be successful, Hongqi would gain rapid access to the Western European manufacturing system and reduce the hundreds of millions of dollars needed for building new factories.

The negotiations are being advanced by Hongqi's parent company FAW Group through Zero Run Automobile. Reuters states that both FAW Group, the parent company of Hongqi, and Stellantis are investors in Zero Run Automobile, and Hongqi also reached an agreement with Zero Run last year to supply electric vehicle platforms.

For Hongqi, European production capacity is crucial to the pace of its overseas expansion. An informed source said that Hongqi aims to achieve an annual sales volume of 1 million vehicles by 2030, with at least 10% from markets outside of China. Hongqi stated last year that by 2028, it would launch 15 electric and hybrid models in 25 European markets and release the compact electric SUV EHS5; if the production in Spain materializes, it would become Hongqi's first manufacturing base in Western Europe.

The most definitive clues about the factory point to Zaragoza. Stellantis will produce models for Zero Run at this factory later this year, and two informed sources said that Hongqi vehicles will also be produced there.

However, this is not a deal yet. Reuters says that negotiations are ongoing and there is no guarantee of an agreement; Hongqi has also considered Hong Kong as a production location because lower tariffs are faced when exporting from Hong Kong compared to Mainland China, but the final plan has yet to be determined.