EU-US auto group Stellantis (think Chrysler, Jeep, Maserati, Peugeot) has announced plans to buy a 21% stake in Chinese electric vehicle (EV) maker Zhejiang Leapmotor Technology. The deal also includes a new Stellantis-led joint venture for the production and sale of Leapmotor EVs outside China.
On paper, it’s a win-win: Leapmotor gets backing from the world’s 4th largest automaker to help reach global markets, while the EU-US giant taps the world’s largest and lowest-cost EV production base (China).
Stellantis and others also have good reason to enter China itself:
- 🚗 It’s the world’s largest EV market (more than half of all EVs on the road are now in China), and
- 📈 It’s growing fast, with automakers smashing monthly sales records on the regular.
But the deal also comes at an intriguing time:
- Just weeks ago, the EU launched a probe into China’s EV subsidies, accusing Beijing of keeping its EV prices “artificially low”, and
- Just days ago, Stellantis said it was ending manufacturing in China.
Intrigue’s take: While Western governments ‘de-risk’ away from China, Western companies still make their own choices. And this Stellantis choice is a classic case of “if you can’t beat ‘em, join ‘em”. The CEO said it yesterday: “We can be benefiting from this Chinese offensive rather than being a victim.”
And it works both ways: we’ve written previously on how some Chinese firms have relocated near the US to cut costs, avoid tariffs, and hedge risk.
It’s all a reminder that policy can look one way on the drawing board, and another way once it hits the real world.