Another partnership similar to “XPeng and Volkswagen” has been finalized.
On October 26, Zhejiang Leapmotor Technology Co., Ltd. (Leapmotor, 09863.HK) announced that Stellantis Group plans to invest approximately 1.5 billion euros to acquire about 20% of Leapmotor’s shares, making Stellantis a significant shareholder of Leapmotor.
At the same time, Leapmotor announced on the Hong Kong Stock Exchange that the company has entered into a subscription agreement with Stellantis, issuing and allotting 194 million H shares to Stellantis at a subscription price of 43.8 Hong Kong dollars per share. The total proceeds from the subscription will amount to 85.09 billion Hong Kong dollars, intended for R&D investment, marketing, enhancing production capacity, operating capital, and general corporate purposes.
As a traditional giant, Stellantis will leverage its partnership with Leapmotor to implement a light-asset operation in the Chinese market and fill the gap in its electrification transformation. As a newcomer, Leapmotor will not only receive financial support but also leverage Stellantis’s influence to enter global markets.
Based on the disclosed information, the collaboration between Leapmotor and Stellantis is deeper than that between XPeng and Volkswagen. Stellantis will acquire up to 20% of Leapmotor’s shares, and the two will establish a joint venture targeting global markets.
Leapmotor stated that this investment by Stellantis Group has granted them a 20% stake in Leapmotor, making Stellantis a significant shareholder and earning them two seats on Leapmotor’s board of directors.
This transaction also confirms that Stellantis Group and Leapmotor will establish a joint venture named “Leapmotor International” with a 51%:49% share ratio. Outside the Greater China region, the joint venture will exclusively handle exports and sales worldwide and will have exclusive rights to manufacture Leapmotor products locally.
Official data shows that Stellantis Group was established in early 2021 through the merger of PSA Group and Fiat Chrysler, becoming the second-largest in Europe and the fourth-largest automaker globally. Brands under Stellantis, such as Maserati, Peugeot, and Citroën, are well-known in China, but their electrification transition has lagged in recent years, leading to a diminishing market share in China. Hence, Stellantis previously announced its plan to adopt a “light-asset business model” in China.
Yet, it remains one of the world’s largest automakers. In 2022, Stellantis sold over 6 million vehicles worldwide, with a net revenue of 179.6 billion euros and a net profit of 16.8 billion euros. In the first half of 2023, Stellantis achieved a net revenue of 98.4 billion euros, a net profit of 10.9 billion euros, and continued to be one of the most profitable companies in the global automotive industry with an adjusted operating profit margin of 14.4%.
Leapmotor states that besides boosting its sales in China, they will rely on Stellantis’s established global presence to increase sales in international markets, starting with Europe.
Stellantis plans to leverage Leapmotor’s electric vehicle ecosystem to achieve electrification goals. Furthermore, both parties might explore mutually beneficial synergies. It is expected that “Leapmotor International” will begin its export operations in the second half of 2024.
Leapmotor, founded in 2015, belongs to the second tier of China’s new car manufacturing forces. Delivery data indicates that Leapmotor delivered 15,800 vehicles in September, a record high. Their Q3 total reached 44,300 vehicles, a 30% QoQ growth.
Leapmotor’s Q3 2023 financial report revealed sales revenue of 5.656 billion yuan, a YoY increase of 31.9%; a net loss of 986 million yuan, but both YoY and QoQ losses narrowed. Their gross margin turned positive for the first time, reaching 1.2%, a YoY increase of 10.1 percentage points, and a QoQ increase of 6.4 percentage points. This achievement came more than three months earlier than Leapmotor had initially anticipated.