Ten months ago Stellantis CEO Carlos Tavares was warning about the coming ‘terrible fight’ with China’s EV industry. Today he’s rolled out the red carpet and paid $1.6 billion to help one Chinese carmaker access the European car market and potentially steal sales from Stellantis’s own brands.
The €1.5-billion deal buys Stellantis a 21 percent stake in fast-growing EV firm Leapmotor and creates a new Netherlands-based joint venture, of which Tavares’s firm will own 51 percent, plus the exclusive rights to export, sell, and manufacture Leapmotor’s vehicles outside China.
But the investment also grants Stellantis better access to the Chinese market for its own products, where it needs to make gains, if it’s to meet a self-imposed target of having half its vehicle sales being EVs by 2030. Though no details about which of the Leapmotor models will come to Europe were confirmed, the first vehicles are likely to arrive in the fall or winter of 2024. Its current EV lineup consists of the T03 city car, C01 sedan, and C11 SUV.
“As consolidation unfolds among the capable electric vehicles start-ups in China, it becomes increasingly apparent that a handful of efficient and agile new generation EV players, like Leapmotor, will come to dominate the mainstream segments in China,” said Tavares. “We feel it’s the perfect time to take a leading role in supporting the global expansion plans of Leapmotor, one of the most impressive new EV players who has a similar tech-first, entrepreneurial mindset to ours.”
Related: VW Buys 5% Stake In Xpeng, Will Jointly Develop EVs For China
The deal represents a massive U-turn in philosophy for Tavares, but Stellantis isn’t the first automaker who has decided to meet the Chinese threat by bringing it closer. Volkswagen, which, like Stellantis, has been losing ground in China, announced a tie-up with Xpeng in July of this year. Reuters reports that Stellantis will offload its share of its current joint venture with Dongfeng Motor Group to Dongfeng, and is shutting down another joint venture with Guangzhou Automobile Group that builds Jeeps in China.
Unsurprisingly, given today’s announcement, Tavares says he doesn’t support the EU’s anti-subsidy probe looking into the potential unfair advantages Chinese brands have in Europe due to state aid.
“As we have global issues to face, we have to adopt a global mentality,” Reuters reports Tavares telling a conference in China. “We do not support a fragmented world. We like competition. To start a probe is not the best way to tackle those questions.”