Why Pirelli's Chinese Ownership Is Problematic
Pirelli is pausing planned expansion in the United States as tensions surrounding its largest shareholder, Chinese state-owned Sinochem, complicate negotiations with U.S. authorities.
Key Points
- Pirelli's plans to expand production capacity in the United States are on hold as the Italian tire maker faces regulatory hurdles related to its largest shareholder, Chinese state-owned Sinochem.
- Local U.S. authorities have expressed concern over Pirelli’s ownership structure, complicating negotiations for a potential $1 billion investment in Georgia to build a smart tire manufacturing facility.
- Pirelli is engaged in ongoing discussions with Sinochem and Italian stakeholders to resolve governance tensions, with a board meeting scheduled for April 28 to address potential solutions.
According to Reuters, the Italian tire manufacturer said that its efforts to grow its U.S. footprint are in trouble due to concerns tied to Sinochem’s 37% stake. Pirelli currently generates around 25% of its revenue in North America, supported by imported tires from production facilities in Mexico, South America, and Europe.
The company already operates a small plant in Georgia, which opened in 2002—almost 70% of the plant's production goes to luxury assemblers based in the U.S. like BMW, Mercedes Benz, and Cadillac, while the remainder of the plant's output is exported globally.
While the U.S. is a key market, regulatory challenges surrounding foreign ownership—particularly involving Chinese interests—are becoming an immoveable barrier.
According to reports in Italian media, Pirelli had hoped to make an announcement during Italian Prime Minister Giorgia Meloni’s upcoming White House visit next week. The proposal included a potential $1 billion investment in Georgia to produce “smart tires,” with a possible increase to $2 billion. However, that announcement appears to be off the table for now as the U.S. escalates its scrutiny of Chinese technology in the automotive sector.
The scrutiny is related to Chinese-controlled software and hardware in cars, and now Pirelli’s ownership structure has caught the attention of regulators. The Italian government has already been forced to try and limit Sinochem’s influence over Pirelli, invoking regulatory powers in 2023 to preserve the autonomy of the company’s leadership.
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An experienced automotive storyteller and accomplished photographer known for engaging and insightful content. Michael also brings a wealth of technical knowledge—he was part of the Ford GT program at Multimatic, oversaw a fleet of Audi TCR race cars, ziptied Lamborghini Super Trofeo cars back together, been over the wall during the Rolex 24, and worked in the intense world of IndyCar.
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