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The Italian government is in advanced talks with Dongfeng Motor to establish a vehicle production facility in Italy. Reports from April suggest that the company is considering a plant with an annual capacity exceeding 100,000 vehicles. This aligns with the Italian government’s aim of revitalising its domestic vehicle production industry, which has experienced a decline in recent years.
Italy’s automotive industry
In 2023, Italy’s vehicle production was around 880,000 units —only half of what was produced in the year 2000 and more than 20% lower than its 2017 output. The government aims to boost production to over one million vehicles annually by 2030.
Currently, Italy has 12 vehicle production or assembly facilities, most of which are operated by Stellantis. Consequently, the success of the Italian automotive industry is closely tied to Stellantis’ performance. Although Stellantis has agreed to increase its output to one million vehicles by 2030, it has not met any production targets agreed upon with the government since 2017.
A Dongfeng plant
A Dongfeng vehicle production plant would help diversify Italy’s production industry and support the government’s goal of reaching one million vehicles per year by 2030. Reports suggest the government may join Dongfeng in a minority stake of a facility. As well as this, the government has “urged Dongfeng” to source at least 45% of its components from local suppliers. A facility would serve as Dongfeng’s hub for expanding into the European market. However, details about the size and location of the potential investment have yet to be disclosed.
Stellantis, however, has expressed concerns, warning in April that the establishment of a Chinese EV plant in Italy could pose a threat and might force the company to make “unpopular decisions.”
Rho Motion’s Evaluation, Dongfeng just of many Chinese OEMs targeting Europe
In 2023, Dongfeng sold 89 EVs in Europe, this year to date it has sold just over 250. Although these numbers are small, the company sees Europe as a crucial market for expansion. However, the EU’s tariffs on Chinese EV imports leaves Dongfeng facing an import tariff of over 30%, eroding its profitability margins. Dongfeng joins many other Chinese OEMs looking to establish European facilities to circumvent EU tariffs, including BYD, Chery and SAIC.
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