- FAW acquired a 5 percent stake in Leapmotor, marking a rare instance of a Chinese state-owned automaker investing in a NEV startup.
- The first jointly developed model by Leapmotor and FAW will debut next year.
Leapmotor (HKG: 9863) has received investment from China FAW Group, representing a rare case of a Chinese state-owned automaker investing in a new energy vehicle (NEV) startup.
The new energy vehicle (NEV) maker announced today in a Hong Kong Stock Exchange filing that it signed a domestic share subscription agreement with FAW Equity Investment, a wholly-owned subsidiary of China FAW, on December 28.
Leapmotor has agreed to issue 74,832,245 domestic shares to FAW Equity at a price of RMB 50.03 per share, equivalent to HKD 55.29 per share.
The issuance raised RMB 3.74 billion ($530 million), with about 50 percent to be allocated for R&D investment, 25 percent for working capital and general corporate purposes, and 25 percent for expanding sales and service networks while enhancing brand awareness.
FAW Equity acquired a 5 percent stake in Leapmotor through this transaction. Stellantis NV (NYSE: STLA), which invested in Leapmotor in 2023, currently holds an 18.99 percent stake.
Leapmotor shares rose in early Hong Kong trading on Monday, climbing about 6 percent to HK$52.95 at press time, with a market capitalization of HK$75.28 billion.
Separately, Leapmotor said in an article published today on its WeChat account that FAW will become its strategic shareholder, promoting strategic synergies between the two automotive groups.
Leapmotor also signed a cooperation agreement with FAW's subsidiary Qixin Power to jointly advance the co-development and production synergy of plug-in hybrid and extended-range powertrains.
The two automakers reached a cooperation agreement in March to jointly develop passenger NEVs and collaborate on components.
Leapmotor's first model developed in partnership with FAW's Hongqi brand was in development and planned to leverage FAW's overseas channels for a launch in the second half of next year, according to a report by domestic media outlet Cailian on August 20.
Yesterday, Leapmotor announced at its 10th-anniversary celebration that its first jointly developed model with FAW will debut next year.
This joint vehicle model will pioneer a new pattern of cooperation between a state-owned enterprise and a private company, said Zhu Jiangming, founder, chairman, and CEO of Leapmotor.
Founded in 2015, Leapmotor has been one of China's fastest-growing NEV startups in recent years.
It delivered a record 70,327 vehicles in November, bringing its January-November total to 536,132 units -- achieving its 2025 sales target before an upward revision.
The company aims to reach annual sales of 1 million vehicles by 2026 and achieve 4 million annual sales in the next decade.
($1 = RMB 7.0093)
