The move comes as European carmakers face mounting competition from Chinese rivals and intensify efforts to expand their electric and hybrid vehicle offerings.
Stellantis, the owner of Peugeot, Fiat and Jeep, said on Tuesday it will invest €1 billion in its Mulhouse factory in eastern France to develop and manufacture three new Peugeot electric or hybrid models, starting in 2029.
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The move comes as European carmakers grapple with weak demand in China, rising global competition and tariffs. At the same time, Chinese brands such as BYD, MG Motor and Chery are gaining ground in Europe's growing EV market, prompting automakers to invest heavily in new technologies and more affordable models.
The announcement forms part of Stellantis' broader €60 billion strategy aimed at restoring profitability over the next five years. It also confirms plans for the site that were outlined by French President Emmanuel Macron last month.
According to Stellantis, the new vehicles will include compact sedans and SUVs, strengthening Peugeot’s position in a market segment that accounts for around 30% of car sales in Europe.
The new models will be compact sedans and SUVs to bolster Peugeot's presence in a "key segment" that accounts for 30 %of European car sales, Stellantis said.
European carmakers are facing growing pressure as they transition to cleaner vehicles while competing with increasingly popular Chinese brands, many of which offer lower-cost electric models.
Earlier this year, Stellantis CEO Antonio Filosa acknowledged that the company had overestimated demand for electric vehicles. The group subsequently recorded a €22 billion write-down linked to its EV investments and launched a strategic review.
Since then, Stellantis has unveiled its new STLA One electric vehicle platform, designed to cut production costs and accelerate the development of new models.
The world’s fourth-largest carmaker is concentrating resources on four of its 14 brands — Peugeot, Fiat, Jeep and Ram — while reducing its European manufacturing capacity by around 20%, equivalent to roughly 800,000 vehicles annually.
The company is also expanding cooperation with Chinese partners to strengthen sales in France and overseas. Chinese automaker Dongfeng recently signed a joint venture agreement with Stellantis covering manufacturing, sales and engineering activities in Europe.
