By LIU Jiaxin
Stellantis’ acquisition of 20 percent of Chinese EV startup Leapmotor for 1.5 billion euros (12 billion yuan, US$1.6 billion) has been completed.
Dahua Technology no longer holds any shares in Leapmotor, and Stellantis has been granted two of the nine seats on the board. Leapmotor's founding shareholders occupy the remaining seven.
When news of the cooperation first hit, Leapmotor stock collapsed as founder and CEO ZHU Jiangming cashed out more than HK$180 million. Afterward, Zhu and others promised not to reduce their holdings in Leapmotor for 10 years.
Two ways of going global
The Leapmotor deal with Stellantis is focused on overseas markets, with a JV already set up in the Netherlands. Leapmotor's first step will be to enter the European market. The Leapmotor C10 will start pre-sales in January next year and be launched and delivered in March.
Domestic EV makers have two ways of going global: exporting complete vehicles or localized production. Many are building factories overseas, but not Leapmotor. The choice will ultimately be down to cost considerations.
WU Qiang, co-president of Leapmotor, will not rely on heavy investment in building factories but on unused capacity abroad for contract manufacturing.
"Stellantis has production bases in various countries, and we also don't rule out using third-party factories for contract manufacturing."
Cultural obstacles
Regarding regional differences, unlike the high demand for electrification and intelligence of EVs in the domestic market, Europe generally has a lower demand for intelligence but a higher demand for transformation and environmental protection. However, there is a significant difference in supporting infrastructure, electricity prices, and other factors in Europe compared to the domestic situation.
In Q3, Leapmotor achieved an operating income of 5.7 billion yuan, a year-on-year increase of 31.9 percent, and the gross profit margin turned positive for the first time.
