Zhejiang Leapmotor Technology, a prominent Chinese electric-vehicle maker, experienced a fluctuation in its stock price following news of a significant investment by Stellantis. Although the initial announcement propelled the company’s shares to rise, they later retreated during the morning session.
The decline was partially attributed to early investors seeking an opportune moment to exit their positions. Ke Qu, an analyst at CCB International Securities, explained that the stock price was under pressure due to selling by pre-IPO investors who saw the partnership as a chance to secure a profitable exit. Qu also noted that Leapmotor, compared to other listed startups in China, has a relatively lower cash reserve, making a strategic partnership all the more valuable. By leveraging the exposure and competitiveness of the European or U.S. markets, Leapmotor can enhance its financial prospects.
Stellantis, a Netherlands-based company, confirmed its plans to invest approximately 1.5 billion euros ($1.58 billion) in Leapmotor, acquiring a 20% stake. The two companies aim to establish a joint venture which will focus on expanding the sales of Leapmotor products beyond China, beginning with the European market. The broader access to the European market is anticipated to significantly impact Leapmotor’s profitability by tapping into a region with high demand for electric vehicles.
Leapmotor, having debuted on the Hong Kong stock exchange in September 2022, dynamically entered the market by raising HK$6.06 billion ($774.8 million) through its initial public offering. In the third quarter, the company reported delivering 44,325 vehicles, marking a remarkable 25% year-on-year increase. Furthermore, its revenue for the quarter reached CNY5.66 billion ($882 million), representing a significant 32% growth compared to the same period last year.
This strategic partnership with Stellantis demonstrates Leapmotor’s commitment to expanding its global presence and capitalizing on the thriving European market. With the new investment, the Chinese electric-vehicle maker is poised to strengthen its position and unlock new growth opportunities.
