(Yicai) Oct. 26 -- Leapmotor Technology’s stock price ended down after Stellantis, the European owner of brands Peugeot and Maserati, said it will acquire about 21 percent of the Chinese electric vehicle startup for EUR1.5 billion (USD1.6 billion).

Leapmotor [HKG: 9863] sank 11 percent to HKD32.80 (USD4.19) at the close, after earlier swinging between a gain of 11.5 percent and a drop of 14.4 percent. It went public on the Hong Kong stock market in September last year.

Stellantis, created by the merger of PSA Peugeot Citroën and Fiat Chrysler Automobiles at the start of 2021, will also have two seats on Leapmotor’s board after the deal, the Amsterdam-based carmaker said in a press release today.

Since it was set up in 2015 Leapmotor has developed a number EV models, including the C01 sedan, C11 crossover sport utility vehicle, and T03 city car, for the Chinese market, where it competes with domestic rivals such as Nio and Xpeng Motors. Leapmotor ranked sixth among Chinese EV startups last year after deliveries jumped nearly three times to almost 111,170.

Under their deal, the pair will also set up a Stellantis-led joint venture, Leapmotor International, which will make, export, and sell Leapmotor vehicles outside of China. Stellantis will appoint a chief executive for the JV, with shipments expected to start in the second half of 2024.

“We feel it’s the perfect time to take a leading role in supporting the global expansion plans of Leapmotor, one of the most impressive new EV players who has a similar tech-first, entrepreneurial mindset to ours,” Stellantis Chief Executive Officer Carlos Tavares said in a statement.

“Through this strategic investment, we can address a white space in our business model and benefit from Leapmotor’s competitiveness both in China and abroad,” Tavares said.

Last week, Stellantis announced that it has sold the third plant in Wuhan jointly owned with Dongfeng Motors to the Chinese partner as the European firm advances its asset-light strategy in China. And a year ago GAC-FAC, the other of Stellantis’ JVs in China, was approved to file for bankruptcy.

The new partnership aims to further boost Leapmotor’s sales in China, the world’s biggest new energy vehicle market, while leveraging Stellantis’ global presence to materially speed up Leapmotor’s sales in other regions, beginning with Europe, the maker of Jeeps and Chryslers said.

The transaction will be in two parts, Hangzhou-based Leapmotor said today. The Chinese firm will issue 194 million new shares to Stellantis worth HKD43.8 apiece, making up almost 15 percent of the enlarged sum of issued shares. Moreover, Stellantis plans to acquire all of the 90 million shares held by Dahua Technology, one of Leapmotor's major shareholders.

The proceeds will be used to enhance the development of smart EV technologies, expand Leapmotor’s sales and services network, as well as increase its output and automation capabilities.

Editor: Emmi Laine