STELLANTIS NV, the maker of Chrysler, Fiat, Jeep and Peugeot cars, is buying a 21% stake in Chinese electric vehicle (EV) maker Zhejiang Leapmotor Technology Ltd.for US$1.6 billion, Netherlands-based Stellantis said early Thursday.

Leapmotor also announced the formation of a joint venture with Stellantis, in which Stellantis will own a 51% stake giving it exclusive rights for the export and sale, as well as manufacturing, of Leapmotor products outside greater China.

The deal, that follows a Volkswagen-Xpeng tie-up announced in July, heralds a new era of automotive alliances in China and reflects how China is emerging as a new global center of EV technology.

Speaking at a press conference in the eastern Chinese city of Hangzhou, Stellantis CEO Carlos Tavares praised Leapmotor as a “tech-oriented company and its passion for “creating the best mobility options.”

“Leapmotor and [CEO] Zhu’s leadership bring a unique profile of good management of the financials of the company, a flexible mind and a strong willingness to grow around the world. This is a race on speed. We can help to enhance the speed,” he said, seated beside Leapmotor CEO Zhu Jiangming.

“Stellantis also needs exposure to the China market. We haven’t been so successful in China so we prefer to rely on a Chinese partner. To win in China is better to win with a Chinese company,” he said.

Stellantis, formed at the start of 2021 through the merger of France’s PSA with Fiat Chrysler (FCA), has struggled to sell cars in China and has been looking to reshuffle its strategy in the country where it has a joint venture with Dongfeng.

The group said a year ago it was closing its joint venture that makes Jeeps in China with Guangzhou Automobile Group amid disappointing results.

The group and rivals such as Renault have been concerned about growing competition from cheap Chinese electric cars in Europe, a worry shared by the European Commission which has launched an anti-subsidy probe into whether to set tariffs to shield European producers from Chinese EV imports.

Asked about how the Leapmotor partnership was different from its tie-ups with Dongfeng and Guangzhou Automobile, Tavares said it was better for a Chinese entity to lead the way in the Chinese market.

The Netherlands-incorporated joint venture is expected to start its export business in the second half of 2024 and its head will be appointed by Stellantis, Leapmotor said. Stellantis would also have two seats on its board of directors.

Zhu said they had been in contact with many automakers this year and found that their culture was aligned with Stellantis. (SD-Agencies)