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.
NEW YORK (AP) — Shares of Tesla soared Wednesday as investors bet that the electric vehicle maker and its CEO Elon Musk will benefit from Donald Trump’s return to the White House.
Tesla stands to make significant gains under a Trump administration with the threat of diminished subsidies for alternative energy and electric vehicles doing the most harm to smaller competitors. Trump’s plans for extensive tariffs on Chinese imports make it less likely that Chinese EVs will be sold in bulk in the U.S. anytime soon.
“Tesla has the scale and scope that is unmatched,” said Wedbush analyst Dan Ives, in a note to investors. “This dynamic could give Musk and Tesla a clear competitive advantage in a non-EV subsidy environment, coupled by likely higher China tariffs that would continue to push away cheaper Chinese EV players.”
Tesla shares jumped 14.8% Wednesday while shares of rival electric vehicle makers tumbled. Nio, based in Shanghai, fell 5.3%. Shares of electric truck maker Rivian dropped 8.3% and Lucid Group fell 5.3%.
Tesla dominates sales of electric vehicles in the U.S, with 48.9% in market share through the middle of 2024, according to the U.S. Energy Information Administration.
Subsidies for clean energy are part of the Inflation Reduction Act, signed into law by President Joe Biden in 2022. It included tax credits for manufacturing, along with tax credits for consumers of electric vehicles.
Musk was one of Trump’s biggest donors, spending at least $119 million mobilizing Trump’s supporters to back the Republican nominee. He also pledged to give away $1 million a day to voters signing a petition for his political action committee.
In some ways, it has been a rocky year for Tesla, with sales and profit declining through the first half of the year. Profit did rise 17.3% in the third quarter.
The U.S. opened an investigation into the company’s “Full Self-Driving” system after reports of crashes in low-visibility conditions, including one that killed a pedestrian. The investigation covers roughly 2.4 million Teslas from the 2016 through 2024 model years.
And investors sent company shares tumbling last month after Tesla unveiled its long-awaited robotaxi at a Hollywood studio Thursday night, seeing not much progress at Tesla on autonomous vehicles while other companies have been making notable progress.
TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 103.40 points at 24,542.48.
In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.
The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.
The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.
The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.
This report by The Canadian Press was first published Oct. 16, 2024.
TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.
The S&P/TSX composite index was up 205.86 points at 24,508.12.
In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.
The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.
The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.
The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.
This report by The Canadian Press was first published Oct. 11, 2024.
