Stellantis returns to China with an investment in a Chinese electric start-up

2023-10-26 10:06:19
The electric CII Reev from Leapmotor, at the Munich Motor Show, September 6, 2023. TOBIAS SCHWARZ / AFP

After the failure of Stellantis in China, there is a change of strategy: the automobile group which brings together the French Peugeot and Citroën, the Italian Fiat, and the Americans Chrysler and Jeep announced, Thursday October 26, the upcoming acquisition of a 21.2% stake in the Chinese start-up Leapmotor, number four in sales of electric vehicles in China, for 1.5 billion euros.

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The agreement also provides for the creation of a joint venture aimed at developing Chinese internationally, called “Leapmotor International”, in which Stellantis will have a 51% stake, and which will hold the exclusive rights to manufacture, export and sell Leapmotor outside of China. “Stellantis also needs to be more present in the Chinese market. We have not prospered in China, so we prefer to rely on a Chinese partner”explained the general director of Stellantis, Carlos Tavares.

This is a major change in strategy for Stellantis, which reflects a historical trend: in the electric age, Chinese manufacturers no longer have anything to envy of foreign brands. In 1992, Peugeot-Citroën was a pioneer in China and had carved out a significant share of the market until 2015. But a lack of dynamism and increased competition in the world’s largest market cost the French dearly, which saw its sales plummet. On October 19, Stellantis announced the sale of its three Chinese factories to its partner Dongfeng, which will manage the production and sale of Peugeot and Citroën models in China. By 2022, Stellantis’ joint venture with Guangzhou Automobile Group Co, which produced Jeep vehicles, had filed for bankruptcy.

Crowded market

With Leapmotor, Stellantis is banking on one of the Chinese start-ups that stands out in a crowded market: there are more than 90 electric vehicle companies, some of which are already bankrupt. Leapmotor was created in 2015 by the co-founder of Dahua, the world’s second largest surveillance company. Located in Hangzhou, west of Shanghai, Dahua sells cameras and facial recognition software.

According to the specialized media IPVMDahua has already proposed possibilities of “ethnic recognition”, allowing the police to detect the presence of members of minorities, such as Uighurs or Tibetans. The company was added by the United States to a Commerce Department blacklist. Stellantis will buy back the 7% stake in Dahua, which will thus no longer have any links with Leapmotor, assures the automobile group.

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