(Bloomberg) -- Chinese electric car maker Leapmotor is little known outside its home country, and even there it is overshadowed by bigger players like BYD Co. and Tesla Inc.
But co-founder and Chief Executive Officer Zhu Jiangming expects that to all change soon, after striking a potentially transformational deal with Stellantis NV — the maker of Chrysler, Fiat, Jeep and Peugeot cars — that will take Leapmotor’s EVs to the rest of the world.
“The original motivation to start Leapmotor was because the transition from internal combustion engines to EVs represents an amazing opportunity,” Zhu said in a wide-ranging interview late last month. The partnership with Stellantis will “allow us to take the lead and go faster than some other Chinese automakers.”
The deal with Stellantis shows how quickly China’s new breed of EV upstarts have shaken up the global auto industry. Founded in 2015, Zhejiang Leapmotor Technology Co., as the company is formally known, delivered just over 33,000 vehicles in the first quarter, a fraction of the 624,398 shipped by BYD and the 1.335 million Stellantis delivered. Still, that puts Leapmotor near the top of China’s EV upstarts like Li Auto Inc., Huawei Technologies Co.-backed Aito, and Nio Inc.
The attraction for Stellantis though, is Leapmotor’s technological know-how, which has allowed it to offer affordable EVs still packed with features like advanced driver assistance and intelligent cockpits that are the industry’s new battlefront as cars get smarter and more connected.
For instance, Leapmotor’s flagship C10 electric sport utility vehicle costs 138,800 yuan ($19,100) and comes with a range of 530 kilometers (330 miles), winning comparisons with Tesla’s Model Y, which starts at 249,900 yuan in China.
“Myself and my team, we’re good at electrical systems technology,” said Zhu, explaining his expertise was gained working for Motorola Solutions Inc. and then founding surveillance-camera company Zhejiang Dahua Technology Co.
That’s an advantage when making EVs, where about 70% of the technological components are electrical and 30% mechanical. The ratio is the reverse for gasoline-powered cars, Zhu said.
The core electrical parts that account for the majority of costs for Leapmotor EVs are produced in-house, allowing the company to cut out suppliers and save on expenses. This makes it one of the few Chinese EV manufacturers that is highly vertically integrated, along with BYD, and allows Leapmotor to sell at an affordable price point and survive what has been a bruising price war in the hotly competitive market.
Those capabilities and cost-controls were what attracted Stellantis to propose the partnership, in which the European automaker invested €1.5 billion ($1.6 billion) for a 21% stake in Leapmotor. It also set up a joint venture to build and sell Leapmotor’s cars outside China through Stellantis’ global network.
The tie-up is now exploring assembly and sales of Leapmotor’s T03 compact hatchback and mid-size C10 SUV in nine European countries, and has tested complete knock-down kit assembly in Poland. But Stellantis’ other plants in the region, including in France and Italy, are also being considered and a final decision is yet to be made, according to Leapmotor co-President Michael Wu.
Still, the deal hasn’t been without some controversy, given Zhu’s role as co-founder of Dahua Technology — which has been sanctioned as a national security threat by the US and previously held a stake in Leapmotor. However, Zhu said that after the partnership was finalized last year and Stellantis purchased Dahua’s shares, Leapmotor no longer has any relationship or shared personnel with the surveillance firm.
Zhu also hit back at US and EU claims that China’s EV industry runs at overcapacity and surplus cars are exported. The EU earlier this month imposed provisional tariffs of as much as 48% on Chinese EVs, while the US has slapped a 100% duty on EVs from China. Canada last month said it’s weighing tariffs as well.
Leapmotor’s Jinhua factory is running at just over 70% of its annual capacity of more than 300,000 vehicles, and could reach 80% by the end of the year, Zhu said. The company is also planning another plant for a new product line launching in 2025, in Hangzhou’s Qiantang district, which also has an estimated annual capacity of about 300,000 units, he said.
And while Leapmotor has received support from China’s government, it’s nowhere near what the US and EU claim, he added. China’s EV industry developed as a result of steady guidance that made many realize it’s the direction of the future, so everyone’s working toward that, said Zhu.
--With assistance from Claire Che, Oscar Petersson and Joanne Wong.
©2024 Bloomberg L.P.