Automotive News Europe — 2024-05-01
Automotive Industry
Dacia could be a key rival to the joint venture, which will start sales of the Leapmotor T03 minicar and C10 SUV in 2024.
Stellantis plans to challenge budget brands such as Dacia with “value-for-money” cars from its new joint venture with the Chinese automaker Leapmotor, analysts said after an investors’ meeting at the Beijing auto show.
Stellantis invested €1.5 bn ($1.6 bn) in October 2023 for a 21% share in Leapmotor, and the two companies set up a joint venture called Leapmotor International, in which Stellantis holds a 51% share. It gives Stellantis exclusive rights to build, export and sell Leapmotor products outside China, a first for a legacy Western automaker.
The JV plans to build and sell cars in Europe, reportedly starting with the T03 full-electric minicar to be made from kits in Poland in 2024. Other markets include the Middle East, Southeast Asia and Latin America.
The partnership offers Stellantis a way to compete in China’s auto market, the world’s largest, after a rocky few years that saw brands such as Peugeot and Citroen lose most of their market share there, as well as the end of Jeep production there in 2022. During the mid-2010s, PSA Group, now part of Stellantis, sold more than 700,000 cars annually in China.
At the same time, Stellantis can benefit from Leapmotor’s lower-cost production and technology, executives said. "The Chinese offensive is visible everywhere," Stellantis CEO Carlos Tavares said in October 2023 in announcing the joint venture. "With this deal we can benefit from it rather than being the victims of it."
Stellantis CFO Natalie Knight referred to Leapmotor as the group’s “15th brand.” In Europe, Leapmotor could be slotted in below Citroen and Fiat in the group's cluster of volume brands. Citroen, Fiat and Opel/Vauxhall will all launch vehicles on the low-cost Smart Car platform in 2024.
Knight said on Tuesday, 30 April 2024, that the first sales and revenue from the joint venture would appear in the second half of the year, but she said the impact on Stellantis' balance sheet "won't be huge" at first.
Initially, Leapmotor’s main products for Europe will be the T03 and the C10, a 4750 mm-long SUV that will reportedly be available in EV and hybrid versions.
New details on the partnership that emerged from the investors’ meeting include information about sales channels, distribution, product positioning and production, according to a note from Jefferies.
Among the details, according to Jefferies:
Outside of the joint venture news, Leapmotor plans to deliver 250,000 to 300,000 cars in 2024, Jefferies said, with monthly deliveries ramping up to 30,000 by the fourth quarter. Sales in 2023 were 144,000.
Leapmotor’s lineup also includes the C11 midsize SUV, which has 650 km (403 miles) range in full-electric verions, and is also available in China as a plug-in hybrid model. In addition to the T03 and future minicars, other models include the forthcoming low-cost C16 midsize SUV and long-range C01 midsize sedan, both of which were shown at the Beijing show.
The Jefferies report said that Leapmotor had narrowed its losses to 915 m renminbi ($126 m), in the fourth quarter of the 2023 fiscal year. Operating cash flow was 1.1 bn renminbi, while free cash flow is “expecting soon” to turn positive, Jefferies said.