Fiat Chrysler Automobiles and PSA Group, which merged to create an auto giant, is in talks with China's Chery Automobile and Guangzhou Automobile (2238) to create a joint venture, local media firm Yicai reported.
FCA and PSA completed its merger over the weekend, creating a new entity named Stellantis.
The new group is planning to hold 75 percent of the shares in the venture, which will make a variety of vehicles from passenger cars to energy-efficient vehicles, according to Yicai.
Stellantis may also close an existing joint venture in China to offload some of its capacity, the publication said.
Zheng Qinghong, chairman of Guangzhou Automobile, said last weekend that the company plans to start mass production of a new electric car with graphene batteries in September, saying it could charge to 80 percent in 8 minutes, mainland media reported.
Last week, Toyota halted lines at its factory in Guangzhou, which is jointly operated with Guangzhou Automobile, on January 11 due to the worsening global semiconductor shortage brought about as chipmakers struggle to meet soaring demand from consumer-electronics companies.
The plant has produced upward of 300,000 vehicles annually in recent years, including the Camry. The lines resumed operation on the eve of January 12 as the necessary parts were able to be procured, spokeswoman Shino Yamada said.
