China’s state-owned automotive giant FAW has made a major strategic move in the electric vehicle sector by acquiring a 5% stake in Leapmotor. The investment, valued at approximately €456.5 million, signals deeper cooperation between major players as competition in China’s EV market intensifies.
FAW Acquires 5% Stake in Leapmotor
Deal Details and Valuation
Just before the end of the year, FAW and Leapmotor officially confirmed the transaction. FAW will invest around 3.74 billion yuan (€456.5 million) in exchange for a 5% ownership stake in Leapmotor.
Despite this move, the largest single shareholder remains Stellantis, although its stake has been diluted:
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Stellantis stake reduced to 18.99%
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Previously held just over 20%, acquired in late 2023
The deal was disclosed through official stock exchange filings.
From Partnership to Equity Investment
Cooperation Began in Early 2025
FAW and Leapmotor are not strangers. Since spring 2025, the two companies have already been working together on their first joint vehicle project.
Industry rumors about FAW taking an equity position in Leapmotor began circulating in the summer of 2025, growing stronger toward the end of the year before finally being confirmed in December.
The investment formalizes a relationship that had already been moving in a strategic direction.
A Sign of Chinese EV Market Consolidation
Too Many Brands, Too Much Pressure
Analysts see FAW’s investment as a potential first step toward consolidation in China’s overcrowded automotive market:
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100+ active car brands
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Ongoing aggressive price war
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Shrinking margins for smaller manufacturers
The Chinese government has repeatedly signaled its intention to cool excessive price competition, making partnerships, mergers, and equity investments increasingly likely.
Leapmotor’s Explosive Growth and Ambitious Targets
Sales Growth Over 100%
Leapmotor enters this deal from a position of strength. In the most recently completed year, the company:
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Increased sales by 103.1%
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Delivered 596,555 vehicles
Founder and CEO Zhu Jiangming has set bold goals:
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1 million vehicles sold annually in the near term
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4 million vehicles per year within the next 10 years
Such targets require not only strong products, but also capital, scale, and strategic partners — something FAW can clearly provide.
What FAW Gains From the Deal
Technology, Speed, and EV Know-How
For FAW, the investment offers:
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Direct exposure to fast-growing EV technology
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Access to Leapmotor’s cost-efficient platforms
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A hedge against slower-moving legacy development cycles
Rather than building everything internally, FAW gains speed by aligning with a proven EV specialist.
Big Picture: A New Phase for China’s EV Industry
FAW’s €450+ million investment in Leapmotor highlights a broader shift in China’s electric vehicle sector:
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From rapid expansion
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To the survival of the strongest
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Toward strategic consolidation
As price pressure mounts and government oversight increases, alliances like this may soon become the norm rather than the exception.
