China's Leapmotor Sells $534 Million Stake to State-Owned FAW in Move to Accelerate EV Sector Consolidation

Beijing | EcoPulse24

Zhejiang Leapmotor Technology Co., a prominent Chinese electric vehicle (EV) manufacturer, has agreed to sell shares worth 3.74 billion yuan (approximately $534 million) to state-owned FAW Group. The deal marks a clear sign of accelerating consolidation within China's EV sector.

The company announced in a formal disclosure on Monday that FAW will acquire a 5% stake in Leapmotor, subject to approval from the China Securities Regulatory Commission, a process that may take several months to complete.

This move comes as China's EV market faces severe saturation, with over 100 brands offering hundreds of models amid slowing demand growth. Excess production capacity has sparked a prolonged price war, squeezing profit margins across the automotive supply chain. In response, Chinese authorities are encouraging state-owned enterprises like FAW to play a larger role in consolidating the sector and enhancing its competitiveness.

Leapmotor is among the few Chinese EV firms to achieve operating profitability, driven by strong demand for affordable family SUVs. According to company data, sales doubled in the first 11 months of the year compared to the same period last year, enabling the company to surpass its annual target of 500,000 vehicles ahead of schedule.

Leapmotor also operates a joint venture with Stellantis NV to distribute its vehicles globally, reflecting ambitions to expand beyond the domestic market. Founder and CEO Zhu Jiangming stated that Leapmotor aims to sell one million vehicles next year and increase annual sales to four million within the next decade, as shared in an official post on WeChat.

FAW's entry as a strategic investor reflects a broader trend of restructuring China's EV sector, as the government seeks to balance growth with financial sustainability and reduce the number of players to boost efficiency and innovation in one of the country's most vital industries.