Summary: Stellantis, the parent company of Jeep and Dodge, plans to invest $1.6 billion in Chinese electric vehicle startup Leapmotor to boost sales of its electric cars overseas and compete in China’s competitive market.
Stellantis’ Investment in Leapmotor
Stellantis, the parent company of Jeep and Dodge, is set to invest $1.6 billion in Chinese electric vehicle startup, Leapmotor. The investment aims to boost Leapmotor’s sales overseas and help Stellantis compete in China’s cutthroat market. Stellantis will take a majority 51% interest in the Leapmotor International joint venture and gain a roughly 20% equity stake along with two board seats in Leapmotor.
Chinese EV Market and Competition
China is the world’s largest electric vehicle market, dominated by domestic company BYD and U.S. automaker Tesla. However, competition is intensifying from domestic startups like Nio, Xpeng, and Li Auto, as well as technology firms like Xiaomi and Huawei. Traditional automakers like Stellantis have been criticized for being slow to transition to electric vehicle manufacturing, hindering their growth in the Chinese market. Stellantis currently holds a 0.3% market share in China.
Potential Benefits of the Deal
The investment by Stellantis can help strengthen its presence in the Chinese market by having a local partner like Leapmotor. It also gives Stellantis access to Leapmotor’s technology and manufacturing footprint to boost its own sales in China. For Leapmotor, the deal provides an opportunity to expand globally and sell its cars abroad through Stellantis’ network. The joint venture has exclusive rights for the export, sale, and manufacturing of Leapmotor products outside Greater China.
Challenges and Concerns
There have been concerns about the success of deals between traditional automakers and Chinese players. Foreign carmakers entering partnerships with Chinese companies, especially through minority shareholdings, have had a poor track record in the auto industry. Stellantis’ CEO Carlos Tavares has acknowledged the pressure traditional automakers are facing from Chinese players and sees the deal with Leapmotor as an opportunity to benefit from the expansion of Chinese companies. However, there are worries among Europe’s automakers and politicians about Chinese companies aggressively expanding into Europe and the subsidies given to Chinese electric vehicle makers.
Carlos Tavares, CEO of Stellantis, stated that the deal with Leapmotor can benefit automakers from the expansion of Chinese companies rather than making them victims of it. He emphasized that Stellantis is not a “Trojan horse” for Leapmotor into Europe and criticized the European Commission’s probe into subsidies given to Chinese electric vehicle makers. Tavares sees competition as positive and believes that starting a probe is not the best approach.
Tags: Stellantis, Leapmotor, Chinese EV startup, electric vehicles, China market, automakers