Global Carmaker Considers Halting All Production in China

New vehicles are parked in storage lots near the the Stellantis Detroit Assembly Complex in Detroit, Mich., on Oct. 5, 2022. (Paul Sancya/AP Photo)

Carmaker Stellantis, manufacturer of the Citroën and Peugeot brands, is considering pulling out fully from China, CEO Carlos Tavares said on Monday.

“Our strategy anticipates the possibility of geopolitical tensions,” Tavares told reporters at the Paris Motor Show on Oct. 17, according to French public radio station RFI. “There have already been several times where we’ve been thrown out of a country when Western sanctions are imposed ... Can we be sure that the stability of relations between China and the world is guaranteed?”

The Stellantis CEO pointed out that the company is still selling Alfa Romeo and Jeep vehicles built outside China inside the country “very profitably.” If the company sticks to this strategy, it won’t need “any factories” in China.

Given the “growing tensions” in the world, Stellantis is prioritizing avoiding vulnerabilities. The world is fragmenting, with states trying to create their own “bubbles,” the CEO said.

“If we think these bubbles will close at some point, we'll have to sell in Europe vehicles that are made in Europe. We will adapt.”

Tavares also complained about how the “red carpet” is rolled out for Chinese manufacturers in Europe, while the reverse isn’t happening. Tavares wants vehicles exported from China to be taxed to the same extent that is applied to Western vehicle imports in China.

Stellantis’ decision comes as manufacturers increasingly consider the possibility of China coming under sanctions if it invades Taiwan in the same way that Russia is currently facing sanctions following its invasion of Ukraine.

Ending Jeep Partnership, Fossil Fuel Debate

In July, Stellantis and China-based Guangzhou Automobile Group (GAC) announced the closure of their Jeep SUV venture that was losing money. Tavares blamed GAC for not wanting to abide by the Memorandum of Understanding the two companies had signed.

Instead, GAC “preferred to be in breach, rather than execute it. We took the conclusion that of course trust was broken,” he said, according to Reuters. The “political influence” in doing business with partners in China is growing day by day, Tavares added.

At the Paris show, Tavares also called for a renegotiation of the European Union’s proposed 2035 ban on fossil-fuel vehicles. Such a “dogmatic decision” would have social consequences that would not be manageable, Tavares warned, according to Reuters.

Forcing a transition to electric vehicles will make car ownership very expensive for many people. “If you deny the middle classes access to freedom of movement, you are going to have serious social problems,” he said.

The European Union is in the process of finalizing a climate proposal package under which plug-in hybrids will be counted as low-emission vehicles only until 2030. Carmakers argue that they should be allowed to sell such vehicles for a longer period, given the billions invested in the technology.