Leapmotor International: The wolf in the sheepfold?

To counter the arrival of Chinese players in the European electric vehicle market, Stellantis has teamed up with a Chinese manufacturer. The idea: to offer low-cost cars on the Old Continent, even if this means competing directly with models from Stellantis' major brands, as well as with its European counterparts. Has the Franco-Italian-American automaker just let the wolf into the sheepfold?

Last October, Stellantis boss Carlos Tavares announced with great fanfare the creation of the Leapmotor International joint venture (in which Stellantis holds 51%) with China's Leapmotor, and his acquisition of a 21% stake in the latter. Theoretically, this operation is intended to counter the massive influx of low-priced EVs from China, notably from BYD and MG. Another avowed aim is to compete with Dacia, the Renault group's low-cost Romanian brand.

Last week, Stellantis announced that the joint venture would start selling its first models in Europe in September, at rock-bottom prices (around €20,000). Relatively unknown on the continent, the group is aiming for a simultaneous arrival in nine countries (France, Italy, Germany, Netherlands, Spain, Portugal, Belgium, Greece and Romania), supported by a network of 200 distributors, which should be expanded to 500 by 2026. The joint venture will then attack the rest of the world, with priority given to South America, the Middle East, Africa and Asia-Pacific, carefully avoiding the United States.

An entry that will not go unnoticed. Firstly, because it runs counter to policies aimed at preserving the continent's automotive industry. Last autumn, the European Commission launched an unfair competition investigation into the subsidies granted by Beijing to its automakers, and said it wanted to increase tariffs on these imports. But if Leapmotor International assembles its models in Europe (Poland is being considered), the joint venture can easily circumvent these protective measures.

Secondly, because it puts its fellow manufacturers at risk. Constrained by labor costs and their dependence on lithium, European automakers will not be able to match Chinese prices, even with good will. And the subsidies granted by Brussels will not be able to compensate for the delta.

To be fair to Stellantis, it's not the only carmaker to be "consorting with the enemy". Germany's Volkswagen, for example, revealed last July its intention to invest over 600 million euros in Chinese manufacturer XPeng.

A number of questions remain: once the wolf has entered the sheepfold, will he be able to distinguish between the sheep within his reach? Or will the Stellantis sheep don a dark-haired skin to join the feast?

Design by Amandine Victor