RPT-BREAKINGVIEWS-Stellantis turns Chinese partner to future rival

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

By Katrina Hamlin

HONG KONG, Feb 25 (Reuters Breakingviews) - Stellantis STLAM.MI risks being overtaken by its Chinese partner. A 2023 joint venture agreement gave the $23 billion European carmaker exclusive rights to build, export and sell electric vehicles from Zhejiang Leapmotor Technology 9863.HK outside the People's Republic, plus a 21% stake in the upstart. At the time, the manufacturer led by Zhu Jiangming sold just over 100,000 cars in its home market, compared to Stellantis' nearly 6 million annual global deliveries. But thanks to the alliance, that gap could narrow quickly - and could one day transform Leapmotor into a formidable competitor.

It's still early days, but the joint venture looks promising. In the first nine months of 2025, Leapmotor exported nearly 40,000 cars, a figure that Zhu reckons can rise to as much as 150,000 in 2026. Expansion beyond China should help the 10-year-old company hit an ambitious sales target of 4 million cars sold at home and abroad by the end of the decade. Analysts believe the JV, which is 51% owned by Stellantis, can be profitable within two years.

For now gains depend on the European partner's global distribution and sales network, which has allowed Leapmotor to enter over 40 markets in a matter of months. Selling its cars in Stellantis showrooms also helps build brand awareness. Crucially, Zhu and his lieutenants are accumulating valuable overseas experience: the Chinese company's management had no prior knowledge of outside markets, Co-President Michael Wu once said in a podcast. As more compatriots expand abroad, that could prove a competitive edge. Even the $118 billion industry leader, BYD 002594.SZ, has stumbled overseas.

In exchange, Stellantis could in theory be gaining EV know-how and technology from its smaller partner, which makes roughly two-thirds of its auto components in-house. Yet earlier this month, Stellantis unveiled a $27 billion writedown after paring back its own EV ambitions, suggesting it has yet to reap those benefits from the joint venture. The group flagged that it will report a net loss when it presents annual results on Thursday.

That's in sharp contrast to Leapmotor, which is on track to report its first annual net profit, of $95 million, in 2025, according to analyst forecasts on Visible Alpha. The diverging fortunes help explain why the Hong Kong-listed company trades on 9 times forecast 2027 earnings, about double Stellantis’ level.

Other established marques will be paying attention as they seek out Chinese EV partners. Ford Motor F.N, for instance, has held discussions with Geely and BYD, Reuters and the Wall Street Journal reported earlier this year. But Leapmotor's ascendance may give them pause for thought.

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CONTEXT NEWS

Stellantis expects to log a net loss for the full year 2025 when it reports annual earnings on February 26, the company said in preliminary results released on February 6. The group booked charges of roughly 22 billion euro ($27 billion) related to plans to scale back electric-vehicles ambitions, according to the same statement.

Zhejiang Leapmotor Technology will report a net profit of around 670 million yuan ($97 million) for the full year 2025, per analyst estimates gathered by Visible Alpha.

Leapmotor exported 37,772 cars in the first nine months of 2025, according to results released in November. The company recorded 13,726 sales in 2024, its annual report shows.

(Editing by Robyn Mak; Production by Aditya Srivastav)

((For previous columns by the author, Reuters customers can click on HAMLIN/katrina.hamlin@thomsonreuters.com; Reuters Messaging: katrina.hamlin.thomsonreuters.com@reuters.net))