Zhejiang Leapmotor (HKG: 9863) shares are up 7% in Hong Kong today. Leapmotor, umm, leaping seems to be related to the Stellantis deal. The basis of that is that we can all see that China has the most viciously competitive of the EV markets around the world. Those that survive in a viciously competitive market are, by definition, those who are efficient - even viciously so. So, if the Chinese EV makers are going to try to export to the global market, as several of them have insisted they will do, then perhaps the western makers should be trying to tie up with, invest in, those Chinese producers? In order to gain access to that efficient technology and manufacturing?
This is what the Latin language (here, Portuguese) is saying: “As fabricantes ocidentais têm estado muito empenhadas em combater os carros chineses, especificamente os elétricos, considerando que são verdadeiramente poderosos, em matéria de preços.” A quick and very rough translation - “they’re cheap.”
Zhejiang Leapmotor share price from Google Finance
It appears that Stellantis (the combination of Chrysler and Fiat) is taking this logic seriously. “Stellantis, an Italian-American car manufacturing group, is on the verge of sealing the investment agreement with Leapmotor, a Chinese EV startup, including licensing their EREV LEAP 3.0 platform, according to three sources familiar with the matter.” Licensing an entire platform is a pretty big deal in fact.
In more detail about the proposed link up: “The latest report does not come as a surprise: in August, Bloomberg reported that Stellantis was looking into a collaboration with a Chinese electric car manufacturer to strengthen its presence in the world’s largest car market. So with the new information, things could become concrete soon.”
There are therefore two aspects to the deal. One is to give Stellantis access to hte Chinese market. The other is to give Stellantis access to the platform to then sell in Europe and similar markets. It’s worth noting that the LEAP 3 platform is not, in fact, a pure EV, it’s a hybrid, with a small motor that charges the battery but which does not link to the drive train.
What we don’t know as yet is the details of the deal. But that it’s coming closer - apparently - is what is driving up the Leapmotor share price.
