Rome wants to raise Italy's national car production to 1.3 million vehicles a year from below 800,000 in 2023 and is already in discussion with Stellantis - the country's sole major automaker - to increase the group's output to one million units annually by the end of this decade, a total it last hit in 2017.

Industry Minister Adolfo Urso has said Italy wants a second manufacturer to add around 300,000 vehicles to national output.

Should the talks succeed, Chery would be among the first Chinese automakers with a European manufacturing presence, intensifying competition with local legacy manufacturers, especially in the electric vehicle.

Urso said last month Italy held talks with Tesla TSLA.O and with three undisclosed Chinese carmakers, whose representatives visited Italy last year to assess potential investment opportunities.

One of the two sources said Chery was for now the option Rome was "betting on most".

A spokesperson for Italy's Industry Ministry declined to comment.

Chery Europe Managing Director Jochen Tueting told Reuters the Chinese automaker expects sales in Europe to be high enough to support a local assembly plant.