(News Bulletin 247) – The company will pay 1.5 billion euros to acquire this stake in the capital of this company which sold 111,000 vehicles in 2022. A joint venture will also be created, and it will own the rights to Leapmotor products outside China .

After having significantly reduced its size in China in recent years, Stellantis is once again forging links with a local manufacturer in the world’s largest automobile market.

The group resulting from the merger between Fiat Chrysler and Peugeot SA announced during the night from Wednesday to Thursday a partnership with the young Chinese manufacturer Leapmotor. The Italian-French-American group plans to invest nearly 1.5 billion euros to take 20% of the capital of this company specializing in electric vehicles and which sold 111,000 automobiles last year.

The agreement will also allow the creation of a joint venture in which Stellantis would own 51% of the capital and Leapmotor 49%. This joint company will hold the exclusive rights to manufacture, export and sell Leapmotor products outside of China. “This will be the first international partnership of its kind in the electric vehicle market between one of the world’s leading automobile manufacturers and a next-generation Chinese automobile manufacturer,” underlines Stellantis.

The joint venture is expected to start deliveries in the second half of 2024. “The transaction is subject to customary closing conditions, including regulatory approvals,” the manufacturer said in a press release.

China, Stellantis’ weak point

“This partnership has a dual objective: on the one hand to further stimulate sales of Leapmotor in China, the largest global market, and on the other hand to use the international commercial presence of Stellantis to significantly accelerate sales of the Leapmotor brand in other regions, starting with Europe,” Stellantis explained.

The Franco-Italian-American group will have two seats on the Leapmotor board of directors. Stellantis believes that Leapmotor’s offering will allow it to complement its current technologies and brand portfolio.

China has been the Achilles heel of Stellantis (and previously of PSA and Fiat Chrysler) for many years. Last year the group sold only 94,000 vehicles in the country, a drop in the ocean compared to the 5.6 million units sold by the company worldwide, or less than 2%. Its market share was only 0.4% in China.

As part of its Dare Forward strategic plan, the group intends to raise the bar, targeting 20 billion euros in revenues by 2030 in this country (knowing that it intends to generate global revenues of 300 billion euros by same deadline).

But last year the group significantly reduced its industrial presence in China. Stellantis has deployed an “asset light” strategy, also ending its joint venture with local manufacturer Changsha and local production of Jeep. Carlos Tavares then underlined the increase in political tensions and the difficulties for European players in evolving in this market which is being renationalized at great speed.

This last month, Stellantis also concluded an agreement with Dongfeng Motor, its historic partner in China, to sell three factories previously owned by DPCA, the joint venture between Stellantis and Dongfeng.