BYD Eyes Stellantis Factories to Sidestep EU Tariffs as Export Surge Masks Margin Strain

BYD negotiates to buy Stellantis' underutilized Italian factories to accelerate European production, bypassing EU tariffs and leveraging existing infrastructure as exports surge.

The calculus for BYD’s European expansion has shifted. With a 17 per cent additional EU import tariff on Chinese-made electric vehicles eating into margins, the Shenzhen-based manufacturer is accelerating plans to assemble vehicles on the continent. Its preferred route: acquiring existing plants rather than building from scratch. Talks with Stellantis over two underutilised sites in Italy — Cassino and Mirafiori — are now at the centre of that strategy.

Stella Li, BYD’s executive vice president, confirmed the negotiations on Wednesday at the FT Future of the Car conference in London. The company wants full operational control, ruling out joint ventures. That approach would shelve earlier plans for a greenfield project in Spain, which no longer appears to be on the table.

The Italian factories offer a ready-made solution. Cassino produced only 2,916 vehicles in the first quarter of 2026, a decline of 37.4 per cent from a year earlier. Stellantis, which recently booked a multibillion-euro write-down on its electric vehicle business, could gain short-term relief from a sale. For BYD, the appeal lies in existing infrastructure, logistics and skilled labour — a far faster path than building from the ground up.

The factory push is underpinned by a sustained export boom. In April 2026, BYD shipped 135,098 vehicles abroad, up 70 per cent year-on-year. That monthly figure surpassed Tesla’s estimated quarterly average of roughly 119,341 units, according to the China Passenger Car Association. BYD alone accounted for 32 per cent of all Chinese electric vehicle exports in April. Its overall sales that month reached 314,100 units, with exports making up about 43 per cent of the total.

External factors are amplifying the momentum. In Spain and South Korea, crude oil prices above $100 per barrel are driving a sharp shift towards electrification. South Korea’s vehicle operating cost index jumped 16 per cent in April, the steepest rise since 2022. The running cost advantage is now stark: an electric car costs around €6.50 per 100 kilometres in Europe, against roughly €14.20 for a petrol vehicle. That gap helped Chinese brands capture a 22 per cent share of Europe’s electric vehicle market in the first quarter.

BYD is also eyeing a higher-tier play. Management described marques such as Maserati and Alfa Romeo as “very interesting”, though no concrete acquisition plans have emerged. For its own premium brand, Denza, the company has poached former Porsche employees and plans a UK launch later this year.

Yet the rapid expansion comes at a cost. BYD’s net profit dropped 55 per cent in the first quarter of 2026 compared with the prior year. To align its cost structure with an export target of 1.5 million vehicles, the company cut approximately 100,000 jobs globally in 2025. A new factory in Szeged, Hungary, is on track to begin series production in the second quarter of 2026, giving BYD a second European anchor point if the Italian talks succeed.

Whether BYD eventually opens factory gates in Cassino or Turin will depend on how much pressure Stellantis faces — and how quickly EU trade policy responds to a growing Chinese manufacturing presence in Europe. Local assembly would substantially reduce the tariff disadvantage and give BYD more room to manage regulatory and demand risks across the region.