Stellantis' $1.6bn Investment in Leapmotor

author: FutureCar Staff    

Stellantis, a multinational automotive manufacturing corporation, has announced its plans to acquire a 21% stake in Chinese electric vehicle (EV) manufacturer Leapmotor in a deal worth $1.6 billion. This move comes as legacy car manufacturers like Stellantis are transitioning to EVs and are seeking to secure access to the Chinese automotive sector and update their manufacturing tools.

A recent thematic report by GlobalData on electric vehicles reveals that China has set a target for neighborhood electric vehicles (NEVs) to account for 25% of its auto sales by 2025. In 2020, China accounted for nearly 38% of global EV sales, highlighting its position as the most populous country with high demand for transportation.

Chinese EV manufacturers, such as BYD, have benefited from robust domestic lithium-ion battery production and government subsidies. BYD, a conglomerate specializing in technology for transport, renewable energy, and electronics, has recently made strategic deals with companies to expand its sales and manufacturing globally. In fact, BYD announced plans to increase EV production to 100,000 units in India over the next few years.

In addition to its global expansion efforts, BYD has also signed dealership agreements in the UK and the EU to further boost its sales capacity. Forbes reports that sales of BYD new energy vehicles nearly doubled in June 2023 compared to the previous year, reaching 253,046 units. In the first half of 2023, the company's shipments almost doubled, reaching 1.2 million units.

Chinese EV manufacturers like BYD and Nio are seeking to diversify and expand overseas as they face growing domestic competition. Data from the China Passenger Car Association (CPCA) shows that China's auto exports increased by 31% in August. This growth is driven by Chinese EV manufacturers' efforts to expand their presence in international markets.

However, the emergence of Chinese EVs has raised concerns among European legacy manufacturers. The European Commission (EC) has launched an anti-subsidy investigation to determine whether to impose punitive tariffs on cheaper Chinese electric vehicle imports that are threatening European Union manufacturers. The EC will evaluate this matter for up to 13 months and consider levying tariffs above the current EU standard for cars, which is 10%.

In her annual address, EC President Ursula von der Leyen expressed concerns about the distortion of the market due to the influx of cheaper Chinese electric cars that are kept artificially low in price through substantial state subsidies. This has prompted the EC to take action to protect European manufacturers.

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FutureCar Staff