Stellantis, owner of Vauxhall, in talks with Chinese competitor for European EV Battery Factory

Vauxhall’s owner Stellantis has been in discussions with a Chinese manufacturer of batteries to build an European factory for auto cells, despite warnings from its chief executive about the danger of Beijing dominating the automotive industry.

Stellantis and CATL are in talks about a joint venture that will produce cheaper power cells. Carlos Tavares hopes this will lower the price of cars.

This deal comes after Mr Tavares warned about an “invasion” of cheap Chinese vehicles in Europe and predicted a “terrible battle” between Asian rivals and domestic manufacturers.

Most of the new EVs are Chinese.

BYD, Ora and Chery will join a host of other automakers, including Dongfeng, Haval and Chery.

Mr Tavares stated: “CATL, the industry leader in battery technology and with our iconic car brands, will bring innovative and affordable battery technology to our customer while helping us achieve carbon net zero ambition.”

The focus of the deal is on making Lithium Iron Phosphate Batteries that are more stable and durable than current Stellantis vehicle cells, as well as cheaper to produce.

Stellantis purchased a 21pc share in a Chinese electric vehicle company last month to take advantage of what its CEO called the “Chinese offense”.

The European carmaker agreed to invest €1.5bn (£1.3bn) in Hangzhou-headquartered Leapmotor, an eight-year-old EV manufacturer.

At the time, Mr Tavares said to reporters: “The Chinese offensive can be seen everywhere.”

He said that the Leapmotor agreement meant that “we could be beneficiaries of this Chinese offensive rather than being victims”.

Exports of Chinese cars to Europe have increased as the local economy has slowed.

The EVs made in China are cheaper than their European counterparts because of state subsidies, and the abundance of batteries produced locally.

Brussels opened an investigation in September into Chinese EV imports. European Commission Chief Ursula von der Leyen claimed that prices were “kept artificially lower by large state subsidies”.

Stellantis’ European competitor Volkswagen said last month that it would intensify cost-cutting measures as the demand for its vehicles falls in China, Europe and its largest market.

Robin Zeng said, “We will continue to deliver more competitive and sustainable options for our partners in order to promote the global energy transition.”