Why Stellantis will sell Leapmotor’s Chinese cars

Stellantis, the parent company of DS, Fiat, Opel and Peugeot, has acquired a stake in Leapmotor for around 1.5 billion euros. The two will jointly sell Chinese cars in Europe.

European automakers are concerned about the rise of affordable Chinese electric vehicles. In addition, it is becoming increasingly difficult for them in the huge Chinese car market.

Stellantis is not a success in China

Premium brands like BMW, Mercedes and Porsche are still doing well in China, but volume brands are noticing that Chinese buyers are increasingly buying Chinese cars.

In the Asian country, sales of Citroën, Peugeot and Volkswagen, among others, are steadily declining. That’s why Stellantis now decides on a remarkable tactic: “If you can’t beat them, join them.”

Deal for 1.5 billion euros

Stellantis buys a 21 percent stake in Leapmotor for 1.5 billion euros. CEO Carlos Tavares: “The Chinese offensive is visible everywhere. So we benefit from it and don’t suffer from it.”

This deal not only gives Stellantis better access to the Chinese market, but the group can also benefit from Leapmotor’s technology, which is strong in the electric car sector.

Stellantis is having great difficulty selling its cars in China. Last year, the company announced the closure of its joint venture with Guangzhou Automobile Group.

Jump engine to Europe

Stellantis is not the first to sign a major contract with a Chinese competitor. At the beginning of the year, VW announced a collaboration with Xpeng.

Stellantis will receive a 51 percent stake in a new joint venture with Leapmotor that will sell the Chinese brand’s cars outside China.

The turning point of Stellantis

The Stellantis deal is notable to say the least, as the company has until recently been harshly critical of the Chinese auto industry. This year, Carlos Tavares once again called on Europe to take protectionist measures.

But now his opinion is suddenly completely different. He praises the Chinese auto industry and criticizes the EU, which has opened an investigation into possible state aid from the Chinese government.

A big problem for Western manufacturers is that China can build electric cars much more cheaply. This is due to lower wages in the country and reportedly government subsidies.