Stellantis NV is nearing a deal to acquire a roughly 20% stake in Chinese electric vehicle company Zhejiang Leapmotor Technologies Ltd., people with knowledge of the matter said, marking the latest attempt by the carmaker to boost its presence in the world’s biggest auto market.
The companies are hammering out final details of a transaction and an announcement could be made as soon as the coming days, the people said. Leapmotor shares have climbed about 22% in Hong Kong this year, giving the Hangzhou-based company a market value of $5.4 billion. A 20% stake would be worth upwards of $1 billion.
Leapmotor and Stellantis are also discussing setting up a joint venture as part of the transaction, according to the people. A partnership could allow Stellantis to manufacture and sell some Leapmotor cars outside China, while also giving it access to the EV maker’s parts and certain technologies, one of the people said.
Stellantis owns brands including Chrysler, Fiat, Jeep and Peugeot. Global carmakers have been eyeing the Chinese EV market as they seek to expand in the world’s second-largest economy. Volkswagen AG in July said it plans to invest $700 million in Xpeng Inc. and jointly develop EVs in the country.
While Stellantis’s discussions with Leapmotor are advanced, they could still be delayed or falter, the people said, asking not to be identified discussing confidential information. A representative for Leapmotor didn’t immediately respond to a request for comment outside regular business hours.
“We announced several months ago that we were studying different scenarios to seize business opportunities linked to the dynamics of China manufacturers in the context of the electrification of the global automotive industry,” a spokesperson for Stellantis said. “We are not elaborating further.”
Stellantis, led by Chief Executive Officer Carlos Tavares, has struggled to gain traction in China compared with the likes of Volkswagen AG and BMW AG. Bloomberg News first reported in August that it’s been exploring an investment in a Chinese EV company such as Leapmotor.
A price war in the Chinese EV market is intensifying as top players like Tesla Inc. launch new models, while others aggressively cut prices in a bid to stem slowing growth. Leapmotor, which raised $803 million in a Hong Kong initial public offering in 2022, is trading about 23% below its debut price amid the fierce competition.
Read More: China’s EV War Just Got Fiercer as Tesla, Zeekr Dial It Up
Stellantis said last week it plans to sell automotive assets to its Chinese partner Dongfeng Motor Group Co. after halting output of its Jeep brand in the country last year.
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