Stellantis, Volkswagen, BMW, Mercedes... are all looking at a way to cooperate with China’s new EV sector. Apparently, they found a way.
Instead of fighting the competition, Stellantis decided to work with them. The Amsterdam-based automaker, one of the largest in the world, closed a deal with Chinese EV supplier Leapmotor. This is the latest development in the fast-shifting European automotive industry.
The $1.6 billion deal makes Stellantis the majority partner of Leapmotor, with 51% of share ownership and 2 board seats. Stellantis will also have exclusive rights to Leapmotor’s exports, sales, and manufacturing outside Greater China, which includes Hong Kong and Taiwan.
Stellantis is a conglomerate founded in 2021 from the union of the Italian-American Fiat Chrysler and the French PSA Group. Under its umbrella, Stellantis controls the Fiat, Chrysler, Jeep, Renault, Citroen, Dodge, Peugeot, and Alfa Romeo brands among others.
Leapmotor is a Chinese startup focused on manufacturing and development of EV technologies. Until now, it was struggling to compete against other Chinese giants including Hyundai and BYD.co. Leapmotor is currently ranked 26th in China for car-making output.
This is the second deal between a European automotive giant and a small Chinese company. Recently, Germany’s Volkswagen closed a similar deal with Xpeng Inc.
The European car industry fears losing its competitive advantage as the world quickly shifts to electric cars. But Europe’s carmakers are not sitting idle.
How Europe is trying to regain ground
Last month, the European Commission launched a probe into China’s subsidies for the car industry. In 2023, China is set to become the largest EV producer overcoming Japan and Germany.
On the other side of the Atlantic, US carmakers Tesla and Ford are also heavily investing in the electric transition, with the latter retaining 60% of the global EV market.
But Tesla is quickly losing ground, “digging their own grave” with the Cybertruck model. With Tesla gone, the likes of BMW, Mercedes, and Volkswagen want to fill the market void before China’s EV start-ups do.
Mercedes and BMW announced new upcoming models that will pass Tesla’s Model Y in efficiency and price. Meanwhile, Stellantis and Volkswagen are trying to set foot in the Chinese market by funding their research and development and gaining all their advantages first.
"We will certainly see more and more such partnerships as Chinese EV startups have a real urgency to survive and they are open to having foreign shareholders," said the managing director at Shanghai-based consultancy Automotive Foresight Yale Zhang.
China already defeated Europe in the race for the solar panel industry. Now, the European Union seemingly learned its lesson and will think twice before giving up one of its most profitable and strategic industries.
