Stellantis, the multinational automotive group behind Peugeot, Fiat, and Jeep, announced on Tuesday a €1 billion investment in its Mulhouse factory in eastern France. The funds will be used to develop and manufacture three new Peugeot electric and hybrid models, with production slated to begin in 2029.
The investment comes as European carmakers confront a challenging landscape: weak demand in China, intensifying global competition, and the imposition of tariffs. Chinese brands such as BYD, MG Motor, and Chery are steadily gaining market share in Europe's expanding electric vehicle (EV) sector, prompting legacy manufacturers to accelerate their own electrification strategies and develop more affordable models.
Part of a Broader Turnaround Plan
This announcement is a key component of Stellantis' broader €60 billion strategic plan aimed at restoring profitability over the next five years. It also confirms earlier indications from French President Emmanuel Macron, who outlined similar plans for the site last month.
According to Stellantis, the new vehicles will include compact sedans and SUVs, a segment that accounts for roughly 30% of all car sales in Europe. By strengthening Peugeot's presence in this crucial market, the company hopes to better compete with both traditional rivals and new entrants from China.
European automakers are under mounting pressure to transition to cleaner vehicles while simultaneously fending off lower-cost Chinese alternatives. Earlier this year, Stellantis CEO Antonio Filosa acknowledged that the company had overestimated demand for EVs, leading to a €22 billion write-down linked to its electric vehicle investments and triggering a strategic review.
Since then, Stellantis has unveiled its new STLA One electric vehicle platform, designed to reduce production costs and speed up the development of new models. The group is also concentrating resources on four of its 14 brands—Peugeot, Fiat, Jeep, and Ram—while cutting its European manufacturing capacity by roughly 20%, equivalent to about 800,000 vehicles annually.
The Mulhouse investment underscores Stellantis' commitment to maintaining a strong manufacturing footprint in France, even as it rationalises operations elsewhere. The plant, located in the Grand Est region, has long been a hub for Peugeot production and is expected to play a central role in the brand's electrification push.
This development also highlights the broader trend of European automakers investing heavily in domestic production to counter the rise of Chinese EV manufacturers. For context, SoftBank's recent €75 billion investment in French AI data centres similarly reflects a strategic bet on France's industrial and technological capabilities.
As Stellantis navigates this transition, the success of its Mulhouse project will be closely watched by industry analysts and policymakers alike. The company's ability to deliver competitive electric and hybrid models from 2029 could determine its position in a rapidly evolving market, where Chinese brands are no longer just a threat but a dominant force.
