Chinese EV maker Leapmotor launched its first car for the international markets called the C10.
Arjun Kharpal | CNBC
Stellantis on Thursday said it will invest 1.5 billion euros ($1.58 billion) in Chinese electric vehicle startup Leapmotor, as traditional automakers look for a way to compete in China’s cutthroat market.
The companies will form the Leapmotor International joint venture, aiming to boost sales of the Chinese brand’s electric cars overseas. Stellantis will take a majority 51% interest in the JV.
Stellantis, which owns brands such as Chrysler and Maserati, said that the investment will give it a roughly 20% equity stake and two board seats in Leapmotor.
China, the world’s biggest electric vehicle market, is dominated by domestic company BYD, as well as U.S. automaker Tesla. Intense competition is rising from domestic startups like Nio, Xpeng and Li Auto, while technology firms like Xiaomi and Huawei are also entering the mix.
Traditional vehicle companies have been seen to be too slow to transition to manufacturing electric vehicles, hampering potential growth in the Chinese market. Stellantis has struggled to sell cars in China and commands just a 0.3% market share in the country, according to the company’s official numbers.
“This deal presents clear synergies for both Stellantis and Leap Motor. Stellantis stands to benefit by strengthening its presence in the Chinese market, while Leap Motor gains an easier entry into the European market,” Abhik Mukherjee, an analyst at Counterpoint Research, told CNBC by email.
Stellantis eyes China boost
The deal could boost Stellantis’ efforts in China, by having a local partner lead the way.
“Through this strategic investment, we can address a white space in our business model and benefit from Leapmotor’s competitiveness both in China and abroad,” Stellantis CEO Carlos Tavares said in a press release on Thursday.
Like many of China’s EV startups, Leapmotor has been looking to position itself as a tech-first brand. The company has developed its own semi-autonomous driving system, and the architecture on which its cars are constructed. Hangzhou-headquartered Leapmotor is also building up its manufacturing capacity.
The Chinese firm has three cars currently on sale and plans to release different styles of vehicles across the spectrum over the coming years.
For Stellantis, the Thursday deal gives it access to Leapmotor’s technology and manufacturing footprint to help the European firm boost sales in China.
Leapmotor targets fast overseas growth
The move could back Leapmotor’s ambitions to become a global EV player. Last month, the company attended the IAA motor show in Munich — a high-profile European auto event — where it unveiled the C10 sports utility vehicle. In the next two years, the company said it plans to introduce five “globally-oriented” products across the world, the automaker said said at the event.
“All of Leapmotor’s subsequent products will be designed and developed with a global mindset and adhere to global standards,” Leapmotor CEO Zhu Jiangming said at a press conference at the time.
The international joint venture with Stellantis can help Leapmotor sell its cars abroad. The JV has exclusive rights for the export and sale, as well as manufacturing, of Leapmotor products outside Greater China, the companies said. Car shipments for the JV will begin in the second half of 2024.
Counterpoint’s Mukherjee said Chinese auto companies face challenges in Europe “in building consumer trust and establishing robust dealership networks.” This deal could help Leapmotor expand into Stellantis’ network, “potentially allowing sales under the Stellantis brand.”
Still, deals between traditional automakers and Chinese players have not always gone smoothly, casting shadow over Stellantis’ big investment.
“Foreign carmakers have woken to the realization that China is leading the race to an electric future. While deals may be struck to regain access to critical technology, such partnerships — especially minority shareholdings like this — have a poor track record for success in the auto industry,” Bill Russo, CEO of investment advisory firm Automobility, told CNBC.
Last year, a joint venture between Stellantis and Guangzhou Automobile Company to produce Jeep products in China, filed for bankruptcy.
Chinese players ramp up the pressure
Stellantis’ huge investment in Leapmotor underscores the pressure that traditional automakers are facing from newer and nimbler Chinese players, as EV sales continue to rise.
This has raised worries among Europe’s automakers and politicians.
Last month, the European Commission, the EU’s executive arm, opened an investigation into subsidies given to electric vehicle makers in China.
Stellantis’ CEO Tavares has been critical of low-cost Chinese cars arriving in Europe in the past. However, he on Thursday said that the deal with Leapmotor can help automakers benefit from the expansion of Chinese companies.
“The Chinese offensive is visible everywhere,” Tavares said at a press conference in Hangzhou, China, according to Reuters. “With this deal we can benefit from it rather than being victims of it.”
He added that Stellantis is not a “Trojan horse” for Leapmotor into Europe and criticized the EU’s probe.
“We like competition. To start a probe is not the best way to tackle those questions,” he said, according to Reuters.
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
