China has always been a stumbling block for Stellantis, where the group is struggling with a level of sales well below what it should be for a group of this size. After some hesitation, Stellantis is reviewing its strategy in China by signing an agreement with Dongfeng to reduce its industrial footprint while acquiring a stake in Leapmotor to become a leader in the electricity sector.
Carlos Tavares did not hide his ambitions to reduce his industrial footprint in China, in order to reduce his risks in a market where national manufacturers are taking on more and more responsibility, helped by the rapid switch to a 100% electric range. s importance.
To this end, the Stellantis group has just sold its three factories in China to Dongfeng, which will now be the sole owner. However, Stellantis is not leaving China and will continue to produce Peugeot and Citroën cars, including the C5 X, for sale in Europe. Although the factories are now owned by Dongfeng, the Chinese group rents them to Stellantis for the production of its models, allowing the group to reduce its industrial footprint and risks while maintaining the production and sale of its current models.
Stellantis participates in Leapmotor
Although the Stellantis group is selling its three factories in Dongfeng, it is not leaving China and the Chinese market, as it has just announced an investment in the capital of a young Chinese electric vehicle manufacturer, Leapmotor, with the aim of creating a joint venture in which Stellantis will be the leading player and which will aim to export its models, particularly to Europe.
For €1.5 billion, Stellantis will acquire approximately 20% of Leapmotor's capital, making it a major shareholder. The agreement also includes the creation of a joint venture "Leapmotor International", managed by Stellantis on a 51/49 basis, which will have exclusive rights to manufacture, export and sell Leapmotor products outside China. This will be the first international partnership of its kind in the electric vehicle market between one of the world's leading carmakers and a next-generation Chinese carmaker.
The objective of this partnership is twofold: on the one hand, to further stimulate sales of Leapmotor in China, the world's largest market, and on the other hand, to use Stellantis' international commercial presence to significantly accelerate sales of the Leapmotor brand in other regions, starting with Europe. This highly innovative and efficient "electric vehicle" ecosystem of Leapmotor in China will contribute to achieving the strategic electrification goals of Stellantis' Dare Forward 2030 plan. It will also allow the company to explore future synergies with its partner. The joint venture plans to start deliveries in the second half of 2024.
Both companies see Leapmotor's electric vehicle offering as complementary to Stellantis' current technologies and portfolio of iconic brands to provide more affordable mobility solutions to international customers. Stellantis will have two seats on the board of directors of Leapmotor and will appoint the CEO of the joint venture "Leapmotor International".
Carlos Tavares, CEO of Stellantis, said: "As consolidation takes place among China's leading electric vehicle start-ups, it is becoming increasingly clear that only a few of these new successful players and agile companies, such as Leapmotor, will eventually dominate key segments in China. We believe that now is the perfect time to actively contribute to the international expansion strategy of Leapmotor, one of the most remarkable new players in the electric vehicle sector, which shares the same technology-driven entrepreneurial spirit as we do. Thanks to this investment, we are providing an innovative response that complements our strategy and benefits from Leapmotor's competitiveness both in China and internationally. I would like to thank Mr Zhu Jiangming and our respective teams for their commitment and contribution to creating this new opportunity for our two companies. "
For his part, Zhu Jiangming, founder and CEO of Leapmotor, said: "This day marks an important milestone in Leapmotor's history and I am extremely proud to have contributed to it alongside Mr Tavares and his team. With its autonomous and comprehensive technology development capabilities, Leapmotor is bringing best-in-class EV products to market in the most competitive way possible. We believe that win-win partnerships between key players are a strength in a rapidly changing environment. By partnering with Stellantis, we will continue to be creative and innovative in technology and business, while successfully developing Leapmotor electric vehicles in the international market. "
By 2022, Leapmotor will have delivered around 110,000 electric cars to the Chinese market, placing it in the top third of Chinese manufacturers specialising in electric vehicles. Targeting the mid-range market, the brand has an expansion plan to cover all market segments in the next three years, thanks in particular to a unique technical architecture and three highly scalable platforms equipped with electric motors with range extender.
With this new strategy, Stellantis is not pulling out of China, but is reducing its industrial footprint and its risks, while taking advantage of the strength of Chinese electric vehicle manufacturers, in particular Leapmotor, to export to Europe. Instead of fighting the Chinese, Stellantis is taking the risk of helping them conquer other markets, including Europe, to become one of the leaders.