Stellantis, home to brands such as Jeep and Chrysler, has become the latest global automaker to tie up with a Chinese startup as the electric vehicle (EV) race continues to heat up.
The Dutch group announced Thursday it would acquire a 20% stake in Leapmotor, a Hangzhou-based EV maker, for about €1.5 billion (nearly $1.6 billion).
The two will form a joint venture that will give Stellantis the exclusive rights to produce, export and sell the Chinese brand’s vehicles outside Greater China. The plan is to start by entering the European market.
Stellantis will control the joint venture, with a 51% stake, while Leapmotor will take a 49% share. The new business expects to start shipments in the second half of 2024.
The deal will allow Stellantis to leverage the startup’s “cost-efficient EV ecosystem” for its own fleet goals, which include a pledge to offer more than 75 fully electric models by 2030.
Chinese brands are catching more attention from established automakers because of their ability to produce EVs at rapid speed and lower cost, allowing them to charge consumers less.
In July, Volkswagen announced it was buying a 5% stake in Chinese EV maker Xpeng and unveiled a strategic partnership to jointly develop new vehicles.
Last month, Reuters reported, citing unidentified sources, that Mercedes was in talks to invest in Chinese EV manufacturer Nio in exchange for use of the startup’s R&D and technology.
A Mercedes spokesperson told CNN on Thursday it was standing by a previous statement that its CEO was in “ongoing regular dialogue with various industry leaders,” including Nio’s chairman, but “there are no plans for an investment or cooperation with Nio.” Nio did not immediately respond to a request for comment.
News of Stellantis’ latest partnership comes about a year after it terminated its joint venture in China with Guangzhou Automobile Group Company (GAC). That business had produced and distributed Jeep trucks in China.
The Dutch group announced previously that it would switch to a so-called “asset-light approach” in the country, which will continue, even with the new tie-up, Stellantis said Thursday.
Stellantis is acquiring Leapmotor shares at a price of 43.8 Hong Kong dollars ($5.6) apiece, according to a Thursday stock exchange filing by the Chinese firm. That represents a 19% premium on its Wednesday closing price.
Investors weren’t impressed, however. Leapmotor shares plunged 11% in Hong Kong on Thursday after the announcement of the deal.