Vauxhall’s owner Stellantis warned that a “invasion of cheap Chinese vehicles” was coming as it pressed its suppliers to reduce costs in order to compete.
As it works to reduce the price of electric vehicles, the firm will use its weight to negotiate lower prices with partners.
Carlos Tavares is the chief executive of the company. He has spoken out before about the high costs of battery-powered vehicles and the danger they pose for mass car ownership.
He said Stellantis is facing a “brutal situation” in which it has to compete with Chinese cars that are a quarter cheaper while having billions invested into electrification. Mr Tavares said to a French radio station China’s ambitions for exports were an “invasion”.
Chinese automakers, primarily electric car manufacturers, are targeting European markets and the UK. They undercut companies such as Volkswagen and Stellantis.
The UK will be the first country to sell cars from large firms such as Warren Buffett’s BYD, Chery (which makes Land Rovers in China), and Great Wall via its Funky Cat Brand.
China has a clear advantage in terms of battery component supply chains. The country’s low labour costs and mature supply chain are a major factor.
Europe plans to build many gigafactories. However, less than a dozen of them are actually operational compared with more than 100 in China. Beijing’s investment in lithium mining, refining and processing also puts it in a better position than European countries .
Stellantis sales increased 12pc, to €98bn. Mr Tavares cost-cutting efforts boosted the company’s profits for the first half of the year from €8bn to €10.9bn.
Volkswagen, the larger German competitor, announced a $700m (£600m) investment in Chinese electric car maker Xpeng to try and revive its fortunes in China.
Volkswagen introduced car manufacturing to China, and it was the number one seller for many years. However, in recent times local startups have taken over the market.
Volkswagen wants both companies to create two battery models before 2026. The company also announced that its Audi brand will be working with SAIC, an state-owned automaker, to develop new models. More details are expected to be revealed in the future.