Stellantis, one of Europe’s leading car manufacturers, is nearing a significant deal to acquire a 20% stake in Zhejiang Leapmotor Technologies, a renowned player in the Chinese electric vehicle (EV) industry. The estimated worth of this agreement is believed to be over $1 billion.

Bloomberg reports that Stellantis, formed through the merger of Fiat Chrysler Automobiles and Peugeot S.A. in 2021, is in the final stages of negotiations with Leapmotor and is hopeful to close the deal within the coming days.

Should this purchase go through, Stellantis could potentially incur a cost exceeding $1 billion. Leapmotor, listed on the Hong Kong Stock Exchange, has seen its shares surge by 25% in 2023 thus far, resulting in a current market cap of $5.4 billion.

Upon finalizing the agreement, Stellantis, which is the parent company of renowned brands like Vauxhall, Jeep, and Alfa Romeo, could enter a joint venture with Leapmotor. This strategic collaboration would allow Stellantis to manufacture and sell Leapmotor’s cars outside of China, providing lucrative opportunities for both parties.

Furthermore, by forming a joint venture company with Leapmotor, Stellantis would gain access to the Hangzhou-based firm’s parts and certain cutting-edge technologies. The collaboration could prove highly advantageous for Stellantis’ ambitions in the Chinese market.

It is important to note that these negotiations are not yet set in stone and could potentially undergo unexpected developments. In recent times, major global car manufacturers have increasingly set their sights on the booming Chinese EV market, acknowledging the immense business potential within the world’s second-largest economy.

In a similar pursuit, Volkswagen, the world’s foremost car manufacturer, revealed plans to acquire a 5% stake in XPeng Motors for $700 million. This ambitious move aims to facilitate the development of two new vehicles targeting middle-class Chinese consumers by 2026.

Stellantis has previously encountered challenges in establishing a strong foothold in the Chinese market. In November 2022, the company closed its joint venture with Guangzhou Automobile Group, which specialized in manufacturing Jeeps in China, due to dwindling sales figures.

A Stellantis spokesperson stated, “We announced several months ago that we were studying different scenarios to seize business opportunities linked to the dynamics of China manufacturers in the context of the electrification of the global automotive industry.” This statement underscores the company’s determination to capitalize on the ever-evolving market landscape.

Both Stellantis and Leapmotor declined to comment on the matter when approached by Bloomberg.

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