Why Stellantis pulled plug on Jeep’s only China factory

The CEO’s candid comments offer an explanation for Stellantis’s announcement last week that it is pulling out of a 12-year manufacturing partnership with state-owned Guangzhou Automobile Group. The exit raises uncomfortable questions about what the future may hold for foreign manufacturers in China.

The war in Ukraine has disrupted supply chains in Europe, and the lengthening list of sanctions targeting Russia is a grim reminder of what could happen if China were to assert itself in Taiwan. Business for carmakers including Stellantis, Volkswagen Group and General Motors Co. in the country is becoming more challenging as local manufacturers including BYD Co. Li Auto Inc. and Nio Inc. are catching up fast, including with a slew of fully electric offerings.

Tavares acknowledged that the Jeep joint venture was racking up losses but said the company’s reasons for leaving run deeper.

While Stellantis had signed a deal to raise its stake in the venture, its local partner GAC “did not do what it was supposed to do,” Tavares said. “So we considered that it was better to unwind.”

The venture had produced the Jeep Cherokee, Renegade, Compass and Grand Commander models primarily for the domestic market. Stellantis will instead ship an electrified lineup of different Jeep vehicles to Chinese dealers.

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