Jeep-maker Stellantis shells out for a stake in Chinese EV maker Leapmotor—and what could possibly go wrong? Meanwhile, a mega oil merger, Europe’s battery champion Northvolt eyes a mega IPO, and Russia and China eye ever closer relations. Plus: tensions flare in the South China Sea.
A RISKY DEAL
Stellantis buys a 21% stake in China’s Leapmotor
Stellantis, the Jeep and Chrysler maker, is buying a 21% stake in Chinese EV company Leapmotor for 1.6 billion USD.
The Netherlands-based legacy carmaker, formed from a 2021 merger between PSA and Fiat Chrysler, hopes the deal can boost its measly China sales. The eight-year-old Chinese EV upstart, meanwhile, wants to eat Stellantis’s lunch.
Under the deal, Stellantis will leverage Leapmotor’s EV technology to juice its China sales, while Leapmotor will make use of Stellantis’s global footprint to expand overseas. The two will also form a joint venture, with Stellantis taking a 51% stake and having exclusive rights for the export, sale, and manufacturing of Leapmotor products outside China. (One wonders if this is a ploy to insulate Leapmotor from potential tariffs stemming from the EU’s anti-subsidy probe.)
Percent change in share prices of Stellantis and Leapmotor, Sep.–Oct. 2023
The Stellantis-Leapmotor deal follows on the heels of Volkswagen’s investment in Chinese EV maker XPeng this summer. It also comes just months after Stellantis said it is opting for an asset-light strategy in China to “limit exposure to geopolitical risk.” Taking a big stake in a Chinese automaker would appear to increase exposure to such risk.
That’s not to mention that Leapmotor’s founder and CEO Zhu Jiangming is also the founder of Dahua Technology, the video surveillance technology firm tied to Beijing’s crackdown on Uyghurs and sanctioned by the US. Zhu maintains a 4.8% stake in Dahua.
Meanwhile, one prominent Chinese automotive analyst sees the deal as a significant step towards boosting Chinese EVs’ global market share.
“Once overseas users begin to consume and experience the technical advantages of Chinese [EVs], products based on the rule system of multinational automotive enterprises, such as the Volkswagen ID. series, will be eliminated from the market quickly,” wrote Wang Xin, author of the blog Full Chain Car.