Stellantis has bought a stake of 20% in the Chinese start-up for electric vehicles Leapmotor. Beyond reinforcing its grip on the Chinese market, the car giant has also stepped into a joint venture for export to nearby Asian countries and Europe. The deal is worth 1,5 billion euros.
The news was rumored already since summer. Weighing its options, Stellantis sought to collaborate with a local carmaker and change strategy after CEO Carlos Tavares decided to pull the plug on the inherited Chinese Jeep production, which was a blow for partner GAC.
The CEO said he didn’t believe local factories were indispensable for the group’s strategy. Earlier this month, the three remaining plants from the car giant’s joint venture with Dongfeng were sold to the latter, which manufactures Peugeot and Citroën models for the local market and will continue to do so.
Tavares’ choice for a so-called ‘asset-light’ strategy in China has further materialized in its collaboration with Leapmotor, which now owns 20%. This start-up in electric car manufacture has no presence in Europe but shifts roughly 10 000 vehicles per month in its home country.
The stake in Leapmotor gives Stellantis a new inroad toward Chinese customers but stretches beyond those plans. By constructing a joint venture called Leapmotor International, which the American-European car giant will lead through a majority stake of 51%, the partners will also set up an export scheme to nearby Asian markets and Europe within two years.
The company doesn’t rule out manufacturing with Leapmotor in the EU. “We don’t want to be the victims of the Chinese offensive on the world; we want to lead the way and control it,” said Tavares.
‘Investigation not the best way’
This represents a turn for Stellantis, with Tavares previously uttering criticism on the lackluster attitude of European politics toward Chinese car manufacturers. The wind of change was affirmed by his executive lieutenant, Davide Grasso, who commented on the EU’s probe into state aid for Chinese brands accused of price-dumping their EVs.
“Since we are dealing with global problems, we must adopt a global mindset. We don’t support a fragmented world. We like competition. Starting an investigation is not the best way to address those questions,” he said.
Financially, Leapmotor isn’t in prime shape. The company’s sales have been hit by slow economic growth, the ongoing price war, and the iron-strong performance from rival BYD. Leapmotor develops electric cars in the higher price range but is loss-making despite rising revenue.
As Western automakers struggle to uphold their competitiveness in China, they seek new partnerships to secure their share in the world’s biggest car market. The reality is that four out of five EVs sold are produced by Chinese companies – for ICEs, two-thirds are imports.
Stellantis seems to be joining the strategy from the Volkswagen Group, which signed deals with Xpeng for the VW brand and with SAIC for Audi.