Stellantis, the company behind Jeep and Dodge, is making a big move in the electric vehicle (EV) market. They’re investing a whopping 1.5 billion euros (around $1.58 billion) in the Chinese EV startup, Leapmotor. This partnership aims to help Stellantis compete in China’s fast-paced EV market.
Stellantis is forming the Leapmotor International joint venture, where they’ll have a majority stake of 51%. In addition to this, Stellantis will also own about 20% of Leapmotor and have two seats on their board.
China is currently the world’s largest market for electric vehicles. Big local players like BYD and American giant Tesla rule the roost. Plus, there’s fierce competition from Chinese startups like Nio, Xpeng, and Li Auto, along with tech companies like Xiaomi and Huawei entering the EV game.
Stellantis has been struggling to sell their cars in China, holding just a tiny 0.3% of the market. This new investment is a strategic move to help them gain a bigger share of the Chinese EV pie.
Abhik Mukherjee, an analyst at Counterpoint Research, believes this partnership is a win-win. He said, “This deal presents clear synergies for both Stellantis and Leap Motor. Stellantis stands to benefit by strengthening its presence in the Chinese market, while Leap Motor gains an easier entry into the European market.”
This collaboration will also let Stellantis tap into Leapmotor’s technology and manufacturing capabilities to boost their sales in China.
Leapmotor is an ambitious player, wanting to go global. They recently showed off their C10 sports utility vehicle at the IAA motor show in Munich, a big European auto event. In the next two years, they plan to introduce five globally-oriented vehicle models worldwide, marking a big step in their global expansion plans.
With the Stellantis partnership, Leapmotor gets exclusive rights to export, sell, and make Leapmotor products outside Greater China. This will kick off in the second half of 2024.
It’s worth noting that while these kinds of partnerships offer great potential, they also carry risks. Similar collaborations in the past have faced challenges, casting doubt on their success.
As the EV market grows, traditional car makers like Stellantis face growing pressure from nimble Chinese players. This investment follows Volkswagen’s $700 million investment in China’s Xpeng in July, showing a trend of traditional car makers teaming up with Chinese EV startups.
Recent concerns among European car makers and policymakers have led to an investigation by the European Commission into subsidies given to EV makers in China. They’re worried about the increasing influence of Chinese companies in the European car market.
Carlos Tavares, CEO of Stellantis, acknowledged China’s strong push into the EV market. He believes that the Leapmotor partnership is an opportunity for traditional car makers to benefit from this expansion rather than being left behind. He welcomed competition and criticized the EU’s probe into Chinese EV subsidies.
With Stellantis’ major investment in Leapmotor, the global EV landscape keeps evolving. Traditional and new players are joining forces to shape the future of how we get around.