State-owned automaker FAW is reportedly getting ready to invest five percent of its equity into the fast-growing electric vehicle startup Leapmotor. Despite earlier rumors suggesting a ten-percent stake, it looks like FAW has decided on a smaller investment.
Key Takeaways
- FAW will acquire 5% of Leapmotor’s equity instead of the previously rumored 10%
- The deal is expected to be finalized later this year, but details on how much FAW would pay for its stake are still unclear.
- Leapmotor’s strong financial performance and consistently high sales figures have convinced FAW to move forward with an investment despite taking a smaller share than originally planned.
The collaboration between the two companies began in spring 2025, resulting in their first joint vehicle project. This partnership has been successful enough that it’s pushed FAW towards making its equity investment decision.
Leapmotor’s founder and CEO Zhu Jiangming recently confirmed ongoing discussions with FAW but emphasized Leapmotor won’t give up control of the company. Stellantis currently holds 21.26% of Leapmotor, while the founders collectively own around 25.8%. Despite not having a majority stake, they effectively retain control.
Leapmotor reported revenue of 19.45 billion yuan in Q3, marking an increase of over 97% compared to last year and almost 36% from Q2 this year. According to projections by Leapmotor’s Vice President Li Tengfei, the company expects a net profit of five billion yuan for next year.
For FAW, making this investment is seen as an opportunity to boost its relatively weak electric vehicle sales performance. With mounting pressure on them to improve in that area, partnering with and investing in Leapmotor seems like a strategic move towards achieving their goals.
Frequently Asked Questions
How much will FAW pay for the 5% stake?
The exact amount isn’t clear yet, but it’s expected to be less than what was initially anticipated.
Why is Leapmotor still attracting interest from big players like FAW and Stellantis?
Leapmotor’s robust financial performance and strong sales figures are key factors in drawing the attention of these major automakers.
The deal between FAW and Leapmotor, while smaller than anticipated, could prove to be a significant step for both companies as they navigate China’s rapidly evolving automotive landscape.
