Stellantis open to use India facility to roll out Chinese JV partner Leapmotor's EVs

Global automotive major Stellantis is open to using its manufacturing facility in India to produce and sell electric vehicles of its Chinese joint venture partner Leapmotor in the country to overcome the hurdle of high import duties, its CEO Carlos Tavares said on Tuesday.

Stellantis NV and China's Leapmotor on Tuesday said they have received all required authorisations, thus completing the formation of Leapmotor International BV – a 51:49 joint venture led by Stellantis.

Under the JV, Leapmotor International's EV products will be launched in nine European countries starting September 2024. In late 2024, the Leapmotor product roll-out will expand to the Middle East and Africa (Turkiye, Israel and French Overseas), India and Asia Pacific (Australia, New Zealand, Thailand, Malaysia and India), and South America (Brazil and Chile), the two companies said.

The JV plans to launch T03, a small five-door, urban boutique commuter car, and C10, a premium end electric car. After that, it will introduce at least one new model every year for the next three years.

In October last year, Stellantis announced an investment of 1.5 billion euros to acquire approximately 21 per cent equity in Leapmotor, one of the top three Chinese EV startup brands in 2023.

Addressing a joint press conference in Hangzhou, China, Tavares said the mission of the JV is to sell Leapmotor vehicles outside of China while acknowledging that the geopolitical tensions especially between China and the West, have resulted in 'bubbles' being created "and then trying to close the market within those bubbles".

When asked if Leapmotor EVs could be manufactured at Stellantis' manufacturing facility in India considering the high import tariff on fully built cars in the country, he said it is a possibility.

"It is quite clear that each time we are facing severe customs duties or tariffs, it is a good opportunity for us to use the manufacturing footprints of Stellantis 'inside of the bubble'. So we are very keen on creating that opportunity for Leapmotor International if that makes economic sense," he said.

He further said, "So there is no limitation, of course, for Leapmotor International to use our (Stellantis) manufacturing footprint inside of India if that was to be the best case." In India, Stellantis has two manufacturing facilities -- one in Chennai for production of Citroen brand of vehicles and another in Pune that rolls out the Jeep brand.

India imposes customs duty ranging from 70 per cent to 100 per cent, depending on the engine size and cost, insurance and freight (CIF) value on cars imported as completely built units (CBUs).

Referring to the US-China tension and the likelihood of Europe increasing tariffs on imports of EVs from China, Tavares said, "If we cannot export directly from Leapmotor International, we can use the manufacturing footprint of Stellantis inside the bubble." 

The good thing about this partnership is that it can accommodate different custom duty scenarios and adapt flexibly to different decisions that could be made by different countries, he added.

On whether Leapmotor EVs could be sold as a Citroen brand in India considering the geopolitical tensions between India and China, Tavares said, "It is clear that the mission of this JV is to sell Leapmotor models.

If anything else was to be discussed in addition to what has already been agreed, that will be a separate discussion with lot of synergy that may be of interest to both the companies but that has not been discussed or decided so far."

He further said, "If something else comes that complements the synergies of the two companies it would be another opportunity." On the timeline of the launch of Leapmotor EVs in India, he said the JV would prioritise launch in Australia and New Zealand under the "India and Asia Pacific region" rollout programme.

In the "second step, we will address India opportunity...We still need to start Australia, New Zealand as the first step and from there we will move and see what are the opportunities in India," Tavares said.

On how Leapmotor International EVs would be retailed in India, either through existing Stellantis sales outlets or through a new network set-up, he said it is premature to commit to a final structure.

"We will have to think the same way as we do anywhere in the world. We bring the existing dealers and offer them the possibility to be multi-brand, which is one option. Do we create new dealerships? That is another option," he said, adding that discussion has not taken place so far.

Tavares further said, "It (the decision) will take place inside of the Leapmotor International JV. For the time being, it will be too soon to answer that question on India."