Stellantis, the global automaker resulting from the merger of PSA and Fiat Chrysler, has made a significant move in the electric vehicle (EV) market with the acquisition of a 21% stake in Chinese EV maker Leapmotor. In a deal worth $1.6 billion, Stellantis will gain access to Leapmotor’s advanced EV technology while also securing a foothold in the European automotive market.

This partnership comes at a crucial time, as traditional international car manufacturers are racing to catch up in the transition to EVs, and Chinese EV makers are expanding globally. Stellantis, in particular, has faced challenges in selling cars in China and has been actively seeking a reset. Currently, the company has a joint venture with Dongfeng Motor Group in China, but the acquisition of Leapmotor offers a fresh opportunity for growth.

In the joint venture agreement, Stellantis will hold a majority 51% stake, granting it exclusive rights to export, sell, and manufacture Leapmotor’s products outside Greater China. However, some analysts remain skeptical about the effectiveness of such minority-stake partnerships in revitalizing established foreign automakers’ fortunes in China.

Moreover, Stellantis is also concerned about the increasing competition from affordable Chinese EVs in Europe. In response, the European Union has launched an anti-subsidy probe to determine whether tariffs should be imposed to protect European producers from Chinese imports. This latest collaboration with Leapmotor is seen as a strategic move by Stellantis to counter these challenges and expand its EV lineup.

The joint venture is expected to commence its export business in the second half of 2024. This partnership will play a significant role in helping Stellantis achieve its goal of having EVs account for all its sales in Europe and half of its sales in the United States by 2030.

For Leapmotor, ranked ninth in terms of new energy vehicle sales in China, partnering with established foreign automakers has become a priority to generate much-needed cash. As part of the deal, Leapmotor will issue 194.3 million shares to Stellantis at HK$43.8 per share, granting Stellantis a 21.07% stake in the company. Additionally, shareholder Dahua will also sell its 90 million Leapmotor shares to Stellantis.

This collaboration between Stellantis and Leapmotor marks a significant development in the global EV market. With Stellantis aiming to tackle its challenges in China while expanding its presence in Europe, and Leapmotor seeking cash flow and international partnerships, both companies stand to benefit from this deal. The partnership will undoubtedly shape the future of electric mobility for both Stellantis and Leapmotor.