On Wednesday, Stellantis NV (STLAM.MI) reiterated that it was exploring deeper connections with Chinese automakers following a Bloomberg story that the business was closing on a deal to purchase around 20% of Zhejiang Leapmotor (9863. HK), an electric vehicle manufacturer.
According to a Bloomberg article citing people with knowledge of the situation, Leapmotor and Stellantis are also exploring forming a joint venture as part of the deal. The report added that a collaboration may enable Stellantis to manufacture and sell some Leapmotor cars outside of China.
According to the article, Stellantis would also get access to some of the EV maker’s technologies and parts through the cooperation. Among its brands are Fiat and Peugeot; however, Stellantis is hardly present in China, the biggest car market in the world. The company is worried about the increasing competition from low-cost Chinese electric vehicles in Europe, as are competitors like Renault (RENA.PA).
Without providing more details, Stellantis stated in a statement that it had previously disclosed that it was “studying scenarios to seize business opportunities linked to the dynamics of Chinese manufacturers in the context of the electrification of the global automobile market.”
Leapmotor declined to comment. The company is valued at around 42 billion Hong Kong dollars ($5.4 billion). This year, its shares have increased by almost 22%. According to Bloomberg, the corporations are working out the last aspects of a deal, and an announcement may be made soon. Next Tuesday is Stellantis’s scheduled publication day for its third-quarter revenue reports.
Due to unsatisfactory performance, the business announced a year ago that it was dissolving its joint venture with local partner Guangzhou Automobile Business (601238. SS) to manufacture Jeeps in China. Despite the industry’s ongoing price battle this year, Leapmotor announced last week that its gross margin for the third quarter had gone positive—a first for the firm.
The corporation has been working toward this objective this year, primarily to raise more money by increasing its valuation, according to a person with firsthand knowledge of the situation.
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