FAW Group plans to acquire a 10% stake in Leapmotor, an EV maker backed by Stellantis, according to Cailian.

FAW Group is a state-owned automotive company in China, while Leapmotor is a Chinese EV startup.

The Cailian report said the investment would pave the way for the companies to jointly develop EV models, fine-tune supply chain management, and expand overseas.

The deal, which is not yet final, would make FAW the first state-owned Chinese automaker to own a stake in an EV startup.

Leapmotor declined to comment, while FAW could not be immediately reached for comment on Wednesday.

🔗 Source: South China Morning Post

🧠 Food for thought

1️⃣ Traditional automakers have been betting on EV startup partnerships for years

FAW’s potential investment in Leapmotor follows a pattern the state-owned automaker established years earlier with other electric vehicle startups.

In 2018, FAW participated in a $500 million Series B funding round for Chinese EV startup Byton, alongside battery maker CATL and other investors2.

That earlier investment demonstrates FAW’s strategy of partnering with innovative EV companies rather than relying solely on internal development.

The Byton partnership was designed to give FAW access to “traditional automotive manufacturing expertise and battery technology” while providing the startup with established manufacturing capabilities2.

This approach reflects the broader challenge traditional automakers face: balancing their manufacturing scale and experience with the technological innovation and agility that EV startups often possess.

2️⃣ State-owned enterprises are taking calculated risks in China’s competitive EV market

The Leapmotor deal represents a strategic move for FAW as China’s EV market intensifies and government policies continue pushing toward electrification.

FAW’s earlier investment in Byton occurred during a period when “government policies and consumer demand are rapidly shifting towards electric vehicles, supported by substantial investments in infrastructure and technology”2.