Countdown to Leapmotor's "sale start" in nine European countries
Latest update time：2024-08-03
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From joint venture to reverse joint venture, a new approach to China's overseas auto market
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Author | Yu Kuai
Editor | Li Yuchen
In the era of going overseas, every car company is exploring the optimal solution for China's automobile exports.
Last October, Leapmotor and Stellantis Group reached a strategic cooperation. Stellantis Group invested about 1.5 billion euros in Leapmotor to acquire about 21% of Leapmotor’s equity, and the two parties established a global joint venture "Leapmotor International". The equity transaction was completed in just 25 days, which is an unprecedented efficiency in the equity transactions of Sino-foreign joint ventures.
On July 30, less than a year after the two parties' strategy was implemented, Leapmotor International, a joint venture established by Stellantis Group and Leapmotor with a 51%:49% equity ratio, shipped the first batch of Leapmotor C10 and T03 electric vehicles from Shanghai Port to Europe this month.
Leapmotor C10 and T03 electric vehicles at Shanghai Port
Leapmotor has explored a new model for Chinese automakers to go overseas - reverse joint venture, forming a development path from exporting complete vehicles to exporting technologies and brands. Whether among many automakers going overseas or among many joint ventures, Leapmotor's overseas model is unique.
Leapmotor International is the first
reverse joint
venture in China's auto industry. For example, Leapmotor provides products, manufacturing and other technologies, while Stellantis is responsible for selling cars with its overseas resources and influence.
Over the past few decades, the traditional joint venture model has been that the foreign party is responsible for technology and management, while the Chinese party is responsible for sales, and the money earned is hard-earned.
41 years ago, BAIC signed a contract with DaimlerChrysler, and Beijing Jeep Motors established the first Sino-foreign joint venture in China's automobile industry. It took more than 40 years for domestic cars to prove that China's new energy vehicles have made leaps and bounds in technology, brand, and product experience, turning Chinese cars from "bringing in" to "going out".
This is a great testament to the rise of China's auto industry.
01
Unique advantages in going overseas
China's automobile exports have achieved a historic breakthrough. According to data from the General Administration of Customs, in 2022 and 2023, China will surpass Germany and Japan to become the world's largest automobile exporter.
On the surface, the situation of Chinese automobile exports is very good. However, a calm analysis shows that the increase in exports is not entirely due to China's brand power and technological strength.
A considerable number of cars exported last year were from foreign brands. Ford Motor adjusted its strategy last year and began to use China as its export center; half of SAIC's overseas car sales last year came from the British car brand MG it acquired.
Moreover, although China has surpassed Japan in terms of export volume, it still lacks in market focus and brand advantages.
The overseas markets of Japanese, German and American car companies are the main force. In the past decade, the annual production of automobiles produced by Japanese companies at overseas bases exceeded 15 million, and that of German and American companies exceeded 10 million.
The second is policy difficulties. China's auto exports have encountered tariff barriers, anti-dumping and anti-subsidy measures from the United States, the European Union, and Brazil. There are many difficulties for Chinese independent brands to go overseas.
After the initial ruling of the European anti-subsidy investigation in June this year, an industry expert told Leifeng.com that "During the Spring Festival this year, the European Commission randomly checked several Chinese auto companies. However, according to the feedback from the companies, the actual investigation of the European Commission has far exceeded the requirements of the anti-subsidy investigation."
Industry experts added, "What's even worse is that in March this year, the European Commission officially announced that it would initiate a temporary registration for Chinese electric vehicles starting from March. The core of the temporary registration is that once a product is temporarily registered, it will be subject to arbitration and anti-subsidy duties in November, which will have a retroactive effect, resulting in the need to pay anti-subsidy tariffs in November for cars imported from March this year, and the impact on Chinese automakers will be even greater."
It can be said that under the influence of current geopolitics, Leapmotor International's overseas expansion model has stronger risk resistance.
Light asset model
China's automobile overseas expansion is at a critical window of opportunity.
Industry experts told Leifeng.com that Europe is the largest market for Chinese auto exports. One reason for this may be that the Russian-Ukrainian war has led to energy shortages in Europe. Previously, the epidemic and the global chip shortage have hampered the production capacity of European automakers. This has given Chinese automakers an opportunity to launch a massive offensive.
Europe is a gathering place for traditional automobile brands and is full of experts. When Europe recovers from the war and increases its production capacity, it will inevitably launch a counterattack. In addition, trade barriers are accelerating and policies are changing significantly.
This means that it is extremely important to seize the current window of opportunity. Whoever can quickly capture the market and the minds of users will get the number plate to enter the next round of competition.
An overseas manager of a car company told Leifeng.com that even a highly developed capitalist market like the European Union has begun to set up trade barriers, and other countries' markets will be even worse. Moreover, the policies of each country in Southeast Asia are different, and the entire market is very fragmented. To build a factory in each country, the cost is not something that new forces can afford.
Building an overseas sales channel system from scratch requires a lot of time, energy, and trial-and-error costs. These asset-heavy, long-cycle attributes discourage many Chinese automakers.
Compared with other companies' overseas expansion models, Leapmotor International is standing on the shoulders of its predecessors. Based on Stellantis' advantages in global marketing network, sales, after-sales service, auto finance, and logistics network, Leapmotor has reduced capital investment and operational risks, and also saved time costs.
With light equipment, the Leapmotor brand can enter overseas markets faster.
Leapmotor C10 and T03 electric vehicles at Shanghai Port
Channel/Service Sharing
There are differences between sales channels in China and overseas, and it is quite difficult to build and manage the network.
In terms of channel network building, there are many countries in the European market, and it is necessary to find different distributors to cooperate with in different countries; in the Southeast Asian market, Japan and South Korea have long dominated, making distributor cooperation and replacement difficult.
Moreover, an issue that is easily overlooked in the overseas market is the matching of Chinese auto brands with overseas dealers. Large overseas dealers are actually very conservative, especially those in German-speaking regions, who are very cautious about electric vehicles and non-European brands. However, they lack a sense of security when looking for small dealers.
In addition, in terms of sales model, China mainly purchases cars with full payment or loans, while the proportion of car leasing in the European and American markets is relatively high. Moreover, in terms of brand recognition and trust, overseas consumers are more inclined to buy brands with a long history and good reputation.
These are the problems that Chinese car companies need to face when going overseas.
As the world's fourth largest automobile group, Stellantis has high brand recognition in overseas markets such as Europe.
An automotive analyst told Leifeng.com, "Stellantis' move has greatly improved Leapmotor's fundamentals.
Stellantis packaged Leapmotor International as its 15th sub-brand
.
This approach is highly accepted overseas and will face much less resistance
."
More importantly, Stellantis has a customer base in more than 130 countries and tens of thousands of channels around the world. Leapmotor International leverages the Stellantis Group's existing sales network and distribution system, service network, logistics network and after-sales support system to sell products in the same stores as Stellantis products and quickly enter multiple overseas markets.
International vision management team and localized marketing
For any car company or any model going overseas, localization is a must.
Many companies have difficulty adapting to the local environment after going overseas. Localization is not only a test of a company's ability to solve complex problems, but also a test of its comprehensive capabilities.
The current management team of Leapmotor's international joint venture has both international vision and local experience, and is able to formulate marketing strategies for overseas markets that are in line with local culture and consumer habits.
Differentiate product positioning, pricing strategy, service quality, brand promotion and marketing activities to find the most suitable competitive advantage for Leapmotor.
The Stellantis Group has been deeply involved in overseas markets for many years and is familiar with the laws and regulations of different countries and regions, which can ensure the stability of Leapmotor International's overseas development.
Leapmotor C10 and T03 electric vehicles at Shanghai Port
Policy advantages: Stronger ability to resist risks
The automobile industry has never been a fully free market and is a pillar industry of a country.
The EU's anti-dumping and countervailing investigation, the US raising tariffs on electric vehicles imported from China to 100%, Russia raising scrapping taxes, Brazil raising import taxes on electric vehicles... Countries are tightening their policies on electric vehicles, trade barriers are getting higher and higher, and uncertainty always exists.
Amid ever-changing policies, "certainty" or "ability to bear risks" is definitely a scarce resource.
Leapmotor International is 51% owned by Stellantis Group and is produced in Stellantis' overseas factories, which have local policy advantages. When faced with the high tariffs mentioned above, Stellantis can adjust the laws and regulations of different countries and regions in a timely manner based on its understanding of the market, and can avoid the policy risks of some markets for Chinese electric vehicles.
02
Walking on three legs
Being the "Uniqlo" of the automotive industry is the unique positioning of Leapmotor. As a listed company, Leapmotor has always adhered to the principle of "performance growth".
Whether it is Zhu Jiangming himself or a group of Leapmotor executives, "price-performance ratio" and "cost pricing" have always been the most frequently used words in Leapmotor's public activities. Zhu Jiangming once emphasized that a substitute product must be infinitely close to an excellent product in terms of performance and product strength, and even reach the state of "I have what others do not, and I am better than others".
Leapmotor has always been willing to spend a lot of effort on "stacking up materials". This is the first time that it has brought high-end intelligent driving configurations such as NVIDIA OrinX, Qualcomm Snapdragon 8295 and 128-line laser radar into a price range of less than 170,000 yuan.
"As long as we can develop, it doesn't matter if we are labeled as an 'ideal replacement'."
Management guru Peter Drucker expressed this view in The Practice of Management:
Real management is not done by managers, but by goals. When the goal is not clear, although everyone is busy, they are just performing the dance of work and engaging in loyalty competition. Therefore, establishing a clear goal system can unify thoughts and focus on direction.
Based on this goal, Leapmotor is gradually forming a three-legged development model: Chinese market + overseas market + Tier 1 suppliers.
The first leg is the Chinese market. In the eight years since its establishment, Leapmotor has insisted on self-development in all fields and has three core technologies: intelligent power, intelligent networking, and intelligent driving. Currently, 60% of the parts are self-developed and self-made, and the platformization allows Leapmotor to have both technical accumulation and cost advantages. The second leg is the overseas expansion mentioned above.
The advantages of the cooperation between Leapmotor and Stellantis will also be brought into play in these two routes. For example,
Leapmotor and Maserati super-tuned chassis technology.
In the second half of the new energy vehicle market, the market has moved from the stage of "indoor large color TV" to the stage of "chassis development". The chassis affects the "character" of a car, and different chassis will bring completely different driving and riding experiences. A good chassis is inseparable from two elements, hardware and tuning. Hardware determines the lower limit, and tuning determines the upper limit.
In terms of hardware and driving experience, the Leapmotor C10 is equipped with CTC 2.0 and self-developed high-performance oil-cooled electric drive, which features high safety, high reliability, high performance and low energy consumption. The rear five-link sports car suspension will reduce shaking during daily starting and braking, and will also better suppress roll when turning. When passing through bumps or potholes, the vehicle will also experience less additional up and down shaking.
The key to whether a car is easy to drive and enjoyable is chassis tuning.
The chassis of a car is itself an extremely complex system complex, and car chassis tuning is an extremely complicated task.
Leapmotor told Leifeng.com that from January 2024 to date, at the Balocco proving ground in Italy and the China Automotive Technology and Research Center's Yancheng proving ground, for six consecutive months, Maserati and the Leapmotor chassis team have conducted multiple rounds of debugging and verification of hundreds of solutions.
CATARC Yancheng Automotive Test Field - Leapmotor & Maserati Chassis Technology Joint Tuning
Leapmotor said that it does not intend to tune Leapmotor into a racing car or a sports car, but rather to make its product combine luxury, comfort and controllability.
For the C10 that was launched for the first time, the Maserati team carried out targeted tuning based on the C10's home style. In the suspension tuning, a relatively low suspension frequency and low shock absorber damping were selected. In terms of suspension kinematics, the overall selection was made for the moderate understeer and moderate vehicle response sensitivity that are most suitable for the C10.
During this process, Maserati's chief automotive engineer and chassis tuning master - Federico Landini, the general manager of the Maserati MC20 model - and his team members conducted the entire tuning process.
After tuning, the C10 has a solid and stable chassis, the steering is precise, and the body is stable and restrained.
The two parties also jointly tuned the Leapmotor C10, T03, C16 and other products on sale. In addition to the overseas versions, the domestic versions will also continue to optimize the experience based on tuning experience (such as vehicle-level OTA, after-sales, etc.). In the future, the two parties will continue to conduct in-depth joint tuning work for Leapmotor's new products.
Technology output and becoming a Tier 1 company will be the third leg of Leapmotor.
In addition to selling cars, it also needs to be a provider of comprehensive solutions for smart electric vehicles.
"Leapmotor hopes to find its own third path, not only as a vehicle manufacturer, but also as a company that exports core technologies," said Zhu Jiangming, founder, chairman and CEO of Leapmotor, at the Munich Auto Show.
It is reported that based on the self-research and production of the three-electric core components and the long-term verification of Leapmotor products in the market, Leapmotor is negotiating with other OEMs to enter their supply chain systems.
The core of Leapmotor's ability to export its technology overseas lies in its technology accumulation of "full-area self-developed" as announced by the outside world.
In Leapmotor's view, full-area self-research means building the most important aspects of the car, such as power, intelligent driving, and cockpit systems, from the bottom up to achieve full independent research and development of "software + hardware".
Zhu Jiangming told Leifeng.com that the biggest benefit of full-domain self-development is that, firstly, product quality is more guaranteed, and secondly, costs can be reduced by reducing the number of parts. Quality and cost advantages may become a stepping stone to Tier 1
.
In the future, Leapmotor will continue to rely on the Chinese market to expand new business growth points, achieve breakthroughs in overseas vehicle sales and the external supply of core components for the three-electric system, and accelerate Leapmotor's realization of a positive net profit.
03
Ready to go, just waiting for September
On August 1, Leapmotor released the latest delivery data: in July 2024, Leapmotor delivered 22,093 units, setting a new record; from January to July, the cumulative delivery reached 108,789 units, achieving a hot start in the second half of the year. Leapmotor ranks among the top three new car-making forces in the Chinese market with its product strength and technological advantages.
The first models to enter the European market this time
are the Leapmotor C10 and the micro car T03, which
will be sold to nine European countries including Belgium, France, Italy, Germany, and Greece starting in September. In the next three years, Leapmotor International will launch at least one new model every year.
Of course, overseas markets will not be limited to Europe. By the end of 2024, Leapmotor International will also launch products in
Turkey, Israel and French overseas territories in
the Middle East and Africa
, India and Australia, New Zealand, Thailand, Malaysia in the Asia-Pacific region, and Brazil and Chile in South America.
In Stellantis' 200 sales outlets, Leapmotor may be sold together with Maserati, and the number of sales outlets will reach 500 by 2026. Stellantis officials have stated that Leapmotor's international goal is to sell 500,000 vehicles outside the Chinese market by 2030.
It can be said that the personnel, outlets and products are all in place, and Leapmotor International is now ready to go, just waiting to be exported to Europe and sold in September.
(
The author has been following Leapmotor for a long time. Interested readers are welcome to add the author on WeChat for communication. WeChat: Yukuaikuaier
)
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