Pirelli signals plans to raise stake in Chinese tire JV

Milan, Italy – Pirelli is planning to increase its stake in the Shenzhou tire manufacturing joint venture with China's Hixih Rubber Industry Group as part of a move to expand its production of high-value tires for the electric vehicle segment.

In a 25 Feb earnings call, CEO Andrea Casaluci said the group intended to exercise an option to raise its stake in the venture from 49% to 70%.

“The expectation is to exercise this call to enter in full control of the plant and to use the production capacity of the factory,” Casaluci said.

The move would allow Pirelli to deploy the facility’s output to support growth in China’s premium tire market.

The factory’s capacity is expected to become “100% high value,” the CEO added, positioning the company to expand in the rapidly growing EV segment.

“We want to take the opportunity to grow in the fast-growing high-value market on the electric vehicle segments, where the market is still growing with a high single-digit pace of growth,” Casaluci said.

According to the Pirelli chief, the strategy is also linked to expanding supply relationships with new Chinese automotive customers.

“We are enlarging our customer base partnering with new successful premium players in China,” Casaluci added.

Also speaking during the call, chief financial officer Fabio Bocchio confirmed that the group holds an option to increase its stake in the joint venture.

“We will have the option to go from the 49% up to the 70%,” Bocchio said.

He added that once the option is exercised, the business would be “consolidated line by line starting from 1 Jan 2026.”

However, Pirelli noted that the transaction is not expected to significantly affect group sales in the near term because the plant already produces tires for Pirelli.

“For 2026 Shenzhou, we don't expect major impact on the sales because the vast majority of this production was already consolidated,” Casaluci said.

“The factory was producing Pirelli tires that we were buying and reselling.”

However, the CEO said, consolidating the factory will lead to "a slight improvement in profitability.” 

“It is value-accretive because being the owner of the factory and consolidating the factory, we will not have the transfer cost, but we will consolidate the whole margin of the production.”

The impact on group results is expected to be modest but positive.

Pirelli originally acquired the 49% stake in Jining Shenzhou Tire Co. Ltd. in 2018 for €65 million, with the right to raise its holding to 70% between January 2021 and December 2025. (ERJ report)