Key Points
Bloomberg reported that Stellantis is soliciting investment among several Chinese companies.
This would apparently be directed at its European operations.
Chinese electric vehicle (EV) and hybrid maker Xpeng(NYSE: XPEV) could soon expand its business dramatically, and that possibility is attracting investors to its equity. They were driving its U.S.-listed American Depositary Shares (ADSes) up by 15% week to date as of early Friday morning, according to data compiled by S&P Global Market Intelligence.
Partners wanted?
Shortly before market open Thursday, Bloomberg reported that Stellantis -- a vehicle conglomerate with a bulging portfolio of brands including Jeep, Chrysler, and Peugeot -- is exploring potential deals with Chinese auto makers. Citing unnamed "people familiar with the matter," the financial news specialist wrote that Stellantis is seeking investors for its European operations.
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According to those sources, executives from the company have met with Xpeng and Chinese tech companyXiaomi to discuss such a collaboration. This might include the acquisition of stakes of Stellantis' European brands; Maserati was mentioned in particular. A deal could also (or instead) cover vehicle-making capacity on the continent, a boon to Xpeng's global ambitions.
Xpeng has a manufacturing presence in Europe, but it's fairly light and relatively recent. Toward the end of last year, it launched production in an Austrian plant owned and operated by a subsidiary of Canadian auto tech and industrial company Magna International.
Global goals
By contrast, within its fairly sizable European portfolio, Stellantis has a wide network of factories across the continent. I'd imagine this is the major attraction for Xpeng in any potential tie-up; at a stroke, it would dramatically expand the company's manufacturing footprint in the huge European Union market, at least (assuming Stellantis is willing to offer this, of course).
Xpeng and other Chinese automakers are ambitious companies that want to make their mark on the world, not just in their native country or continent. The possibility of a deal with Stellantis could be significant in these aims, if the article is accurate, and investors are right to be bullish.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool recommends Magna International, Stellantis, and Xiaomi. The Motley Fool has a disclosure policy.
