Credit：Stellantis

Stellantis announced earlier this week that Grégoire Olivier, former Chief Operating Officer (COO) of China, was named as head of a newly created “liaison office” to Zhejiang Leapmotor Technologies Ltd, reporting to Stellantis CEO Carlos Tavares. Olivier is in charge of execution of the strategic partnership, including the creation of the sales joint venture and the coordination with Leapmotor on the use of Stellantis distribution and sales assets. Doug Ostermann, former Chief Financial Officer and Head of Strategy in China, took Oliver’s role of COO, reporting to Carlos Tavares. Both Olivier and Ostermann now serve as board members of Leapmotor.

“In order to ensure the perfect execution of our recently announced strategic initiative with Leapmotor, we have decided to adapt our organization in China, relying on two very skilled top executives. Grégoire and Doug have been working hand-in-hand over the last two years to craft a new strategy and open new ways of growing our business and I trust both of them to give a new impetus in their respective roles,” said Stellantis CEO Tavares.

Stellantis’s reshuffle of the leadership in China came a week after announcement of its deal with Leapmotor. The European auto giant said it will spend 1.5 billion euros (US$1.58 billion) to acquire a stake of about 20% in Leapmotor. Leapmotor is going to issue 194.3 million Hong Kong shares to Stellantis for HK$43.8 apiece, a 19% premium to their close on October 25. Stellantis will hold around 21.07% of Leapmotor’s Hong Kong shares upon the transaction completes. The two companies are also going to set up a joint venture, in which Stellantis will own a 51% stake and have the exclusive rights for the export, sale and production of Leapmotor vehicles outside Greater China.

Stellantis delivered a total of 1.48 million vehicles in the third quarter of the year, while it just shipped 37,000 vehicles in China and India & Asia Pacific that quarter, according to the company’s financial results released last week. The new partnership with Leapmotor is Stellantis’ latest effort to regain momentum in China. Leapmotor is the fourth largest Chinese EV pure-play manufacturer as of September 30, 2023, according to China Automotive Technology & Research Center (CATARC).

The joint venture is expected to begin shipments in the second half of 2024 starting in Europe, aiming to sell 500,000 units outside of China by 2030, according to Stallantis’ presentation about earnings in the third quarter. It said Leapmotor targets sales of 1 million units annually in China in the long run, capitalizing on position as tech-led, pure-EV domestic leader. It expected the venture will have no material impact to Stellantis’ industry-leading adjusted operating income (AOI) margins.

At an earnings call with analysts last week, Stellantis CEO Travares denied the Leapmotor deal could turn his company into a conduit for Chinese EV makers trying to take over the European market. Through the deal, "we can be benefiting from this Chinese offensive rather than being a victim," Travares said. The chief executive said Leapmotor vehicles will arrive in Europe in two years, at the latest. He blasted the European Union (EU)’s recent anti-subsidy probe into EVs imported from China. "A probe is like giving you a shot to go to sleep," he said. It "can represent a bad excuse not to do the right things at the right speed to compete with my Chinese competitors. I have to race."

Stellantis Chief Financial Officer (CFO) Natalie Knight at the call described Leapmotor as Stellantis’ 15th brand, with sales and revenues of the joint venture fully consolidated into its balance sheet. Europe will be the first market for Leapmotor's EVs, and the venure will distribute the company’s vehicles to other global markets, with long-term exclusive distribution on cars sold outside China, according to Knight. The venture also includes the option to produce Leapmotor cars in Europe to avoid potential high tariffs imposed on vehicles built in China from an EU investigation, Knight told analysts.

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