A China Remedy for Europe’s Auto Overcapacity Faces Uphill Task

Europe’s automakers face a dilemma: Many of their plants in the region are operating at a fraction of their capacity, but shutting them means inviting the wrath of unions and politicians.

Stellantis NV believes it has a way out. The company has met with China’s Xpeng Inc. and Xiaomi Corp. to explore deals to potentially invest in the Fiat owner’s struggling European operations and perhaps take over some of its excess capacity, Bloomberg reported Thursday. That would effectively give Chinese carmakers looking for a bigger slice of the region’s market a way to produce locally.