Prime Highlights
- China FAW Group has made a strategic investment in Leapmotor, showing strong confidence in the NEV maker’s growth and future potential.
- The partnership will lead to the launch of Leapmotor’s first jointly developed vehicle with FAW next year, marking a new cooperation model in China’s auto industry.
Key Facts
- FAW invested RMB 3.74 billion (around $530 million) to acquire a 5 percent stake in Leapmotor through a share subscription agreement.
- The funds will be used mainly for research and development, business operations, and expanding Leapmotor’s sales and service network.
Background:
Chinese new energy vehicle maker Leapmotor has received a strategic investment of RMB 3.74 billion (about $530 million) from China FAW Group. The deal is a rare example of a state-owned automaker backing a private NEV startup and shows strong confidence in Leapmotor’s future growth.
In a filing with the Hong Kong Stock Exchange, Leapmotor said it signed a domestic share subscription agreement with FAW Equity Investment, a wholly owned unit of China FAW, on December 28. Under the agreement, Leapmotor issued 74.83 million domestic shares at a price of RMB 50.03 per share, giving FAW Equity a 5 percent stake in the company.
The funds raised will be strategically deployed to support Leapmotor’s next phase of expansion. About half of the funds will go toward research and development to improve vehicle platforms and powertrain technology. A quarter of the capital will be used for day-to-day operations and general business needs, while the remaining 25 percent will support the expansion of sales and service networks and boost brand visibility.
Following the announcement, Leapmotor’s shares climbed nearly 6 percent in early Hong Kong trading, lifting the company’s market capitalization to about HK$75.28 billion. Leapmotor also confirmed that FAW will become a strategic shareholder, enabling deeper cooperation and operational synergies between the two automotive groups.
In addition to the equity investment, Leapmotor has signed a cooperation agreement with FAW subsidiary Qixin Power to jointly develop plug-in hybrid and extended-range powertrain systems. The two companies had already agreed earlier this year to collaborate on passenger NEVs and key automotive components.
Leapmotor said its first vehicle developed with FAW will be launched next year, marking a new type of partnership between a state-owned company and a private automaker. The vehicle is expected to benefit from FAW’s global distribution channels, supporting Leapmotor’s international ambitions.
Founded in 2015, Leapmotor has grown into one of China’s fastest-rising new energy vehicle brands. The company delivered a record 70,327 vehicles in November, taking total deliveries from January to November to 536,132 units. Looking ahead, Leapmotor plans to sell one million vehicles a year by 2026 and reach four million annual sales within the next decade, strengthening its role in China’s fast-growing electric vehicle market.
