Italian tyre maker Pirelli says it has put on hold plans to invest further in the US due to tensions pertaining from its ownership by Chinese state-owned group Sinochem, which is its largest investor.
Sinochem has a 37% stake in Pirelli and is at odds with the company and its Italian shareholders over governance, at a time when being seen as a Chinese-linked business is increasingly proving an obstacle for doing business in the US, one of Pirelli’s key markets, said a report by Reuters.
Pirelli makes around 25% of its revenues in North America, which it mostly serves through its plants in Mexico, South America and Europe, although it also runs a smaller facility in the US state of Georgia.
The Italian government intervened in 2023 to curb Sinochem’s powers in Pirelli and shield management’s autonomy.
Responding recently to a media report, Pirelli said its desire to increase its production capacity in the US “has been known for some time”.
“At the moment, however, nothing has been decided given the regulatory obstacles linked to questions of governance and shareholder structure regarding which … evaluations and in-depth analyses with Sinochem are still ongoing,” it said in a statement.
Pirelli is expected to invest US$1 billion in Georgia to produce so-called smart tyres, potentially raising the investment to US$2 billion in the future.
Expanding capacity in the US would help limit the impact of US tariffs, but Washington has also decided to crack down on Chinese technology in the automotive industry, banning key software and hardware from Chinese-controlled companies.
Marco Trochetti Provera, the Italian businessman at the helm of Pirelli since 1992 and now its executive vice-chairman, has said that US local authorities were raising objections in negotiations on plans to expand the group’s capacity in the country due to Sinochem’s stake.