TMTPost -- Chinese electric vehicle (EV) maker Zhejiang Leapmotor Technologies Ltd. is taking a major step toward producing EVs in Europe with Stellantis NV, the second largest European automobile manufacturer by sales.
Credit：Leapmotor
China's National Development and Reform Commission (NDRC) has approved a proposed join venture between Leapmotor and Stellantis, Reuters cited sources earlier this week, adding that the venture still needs regulatory approval in other markets. While not responding to the news about NDRC’s greenlight, Leapmotor said in a statement to Reuters on Thursday the executive team of the venture is in place as C10, its first EV model targeting international markets, will soon start sales from Germany, France, Italy and Spain.
Leapmotor at beginning of this month announced it delivered 6,566 EVs last month, more than doubling a year earlier, though the delivery sank 46.5% from January. The automaker began presales of C10 on January 10 and has accumulated over 45,000 preorders of the model to the date prior to the official devlivery release on March 2.
The report of NDRC approval suggested both Leapmotor and Stellantis, owner of Chrysler, Fiat and many other iconic brands, are making progress in implementing their plan to build an EV factory in Europe, part of partnership reached almost four months ago. The Fiat car maker announced late October that it will spend 1.5 billion euros (US$1.58 billion) to acquire a stake of about 20% in Leapmotor. Leapmotor is going to issue 194.3 million Hong Kong shares to Stellantis for HK$43.8 apiece, a 19% premium to their close on October 25. Stellantis will hold around 21.07% of Leapmotor’s Hong Kong shares upon the transaction completes. The two companies are also going to set up a joint venture, in which Stellantis will own a 51% stake and have the exclusive rights for the export, sale and production of Leapmotor vehicles outside Greater China.
The joint venture is expected to begin shipments in the second half of 2024 starting in Europe, aiming to sell 500,000 units outside of China by 2030, according to Stallantis’ presentation about earnings in the third quarter of 2023. It said Leapmotor targets sales of 1 million units annually in China in the long run, capitalizing on position as tech-led, pure-EV domestic leader. It expected the venture will have no material impact to Stellantis’ industry-leading adjusted operating income (AOI) margins.
At an earnings call with analysts late October, Stellantis Chief Financial Officer (CFO) Natalie Knight at the call described Leapmotor as Stellantis’ 15th brand, with sales and revenues of the joint venture fully consolidated into its balance sheet. Europe will be the first market for Leapmotor's EVs, and the venure will distribute the company’s vehicles to other global markets, with long-term exclusive distribution on cars sold outside China, according to Knight. The venture also includes the option to produce Leapmotor cars in Europe to avoid potential high tariffs imposed on vehicles built in China from an EU investigation, Knight told analysts.
When releasing earnings of the year 2023 last month, Stellantis CEO Carlos Tavares was reported to divulge that the company may build Chinese EVs in Europe for Leapmotor if there was a good business case to support the strategy. Tavares mentioned Stellantis’ Mirafiori plant in Turin as the potential home to Chinese EV builds for Leapmotor. Stellantis’ local dealers in the European market would then sell those EVs.
Stellantis is mulling building up to 150,000 EVs per year in in its Mirafiori complex in Turin, the capital city of Piedmont in northern Italy, and the production may start as soon as 2026 or 2027, Automotive News Europe reported following Tavares’ comments. If the reported production materilized, it would be helpful for Stellantis to meet its long-term production goal for all of its Italian factories, which may ease tensions between the world’s third largest automaker by revenue and the Italian government.