Stellantis brings Leapmotor to Europe in budget EV battle

HANGZHOU, China (Reuters) - Stellantis is seeking the maximum manufacturing flexibility to navigate potential customs duties as it takes on China's budget electric vehicle (EV) players with models from its own Chinese joint venture (JV) partner Leapmotor.

The two groups said on Tuesday their Leapmotor International JV would start selling two Leapmotor models in Europe from September through an initial network of 200 dealerships.

Stellantis CEO Carlos Tavares said that no decision had been taken about exactly where the Leapmotor EVs would be built in Europe, but that quality and price competitiveness were key.

The aim is to tempt buyers with a model priced at under 20,000 euros ($21,640), Tavares added, a level that would allow it to compete with models from rivals such as Chinese EV giant BYD.

With trade tensions between China and the European Union over possible unfair government subsidies to Chinese EV makers, Tavares said production can also be allocated based on this evolving scenario.

"We can accommodate different custom duties scenarios by using or not, depending on the regions, the plants that we have inside of the (regions)," Carlos Tavares said at an official launch with Leapmotor founder and CEO Zhu Jiangming.

"This is a very ... interesting partnership for both of our companies because we can accommodate flexibly".

Tavares said Stellantis' Tychy plant in Poland could be a possibility as a production facility for Leapmotor EVs in Europe. The Franco-Italian automaker already picked Tychy, sources have told Reuters.

FIRST OF A KIND

While Western automakers have created several joint ventures with peers in China to enter the market there, the Stellantis-Leapmotor partnership is the first one designed to sell and produce EVs from a Chinese manufacturer outside China.

The Netherlands-based JV, 51% owned by Stellantis, "enables us to accelerate the way to go to market with smart and affordable EVs," Tavares said.

Sales will begin with Leapmotor's T03 compact city car and C10 medium-sized SUV but the venture aims to offer at least one new Leapmotor model annually over the next three years for overseas markets.

"We do not intend to leave the 20,000 euro price band of the market to our Chinese competitors," Tavares said on Tuesday. "You can expect the (Leapmotor) T03 would be priced below 20,000 euros in Europe".

BYD has plans to launch its Seagull model in Europe for less than 20,000 euros. BYD is among a number of Chinese manufacturers, including Chery and Dongfeng, planning or considering manufacturing in Europe.

Leapmotor International will sell EVs in nine European countries including Germany, France, Italy, Spain and the Netherlands, and will target South America, Middle East and Africa, and the India-Asia Pacific regions from the fourth quarter of 2024.

It has no plans to sell or manufacture cars in the U.S., a spokesman for Stellantis said.

The JV is part of a wider partnership between the two groups which saw Stellantis announce last year that it was buying a 21% stake in Leapmotor in a $1.6 billion deal.

It gives Netherlands-headquartered Stellantis exclusive rights to build, export and sell Leapmotor products outside China.

The automaker has 14 brands including Peugeot, Jeep, Fiat and Ram and has often referred to Leapmotor as its 15th one.

With five models priced from as little as 49,900 yuan ($6,900) to 151,800 yuan, Leapmotor delivered a total of 33,410 units of extended-range hybrids and pure electric cars in the first quarter, accounting for 2.4% of total sales of such vehicles in China in that period.

($1 = 0.9265 euros)

($1 = 7.2330 Chinese yuan renminbi)

(Reporting by Sarah Wu in Hangzhou, Zhang Yan in Shanghai and Giulio Piovaccari in Milan; additional reporting by Gilles Guillaume in Paris; writing by Giulio Piovaccari; editing by Alvise Armellini, Keith Weir and Jason Neely)