Leapmotor’s Europe Surprise: EVs Hit 90% of Sales as Localization Talks Advance

Leapmotor’s Europe Surprise: EVs Hit 90% of Sales as Localization Talks Advance

TREE NEWS reports: Leapmotor International CEO Danilo Annese said at the Paris Motor Show on Monday that battery-electric vehicles account for as much as 90% of the brand’s European sales, with overall volumes running ahead of the company’s expectations from a year ago. Annese described the EU’s ongoing negotiations over restricting hybrid imports as “an interesting alternative to tariffs,” and said the joint venture will comply with whatever trade agreement is ultimately reached.

At the same show, Leapmotor unveiled the D19 SUV equipped with a range extender and said it is evaluating how to make further use of its existing European production capacity.

Demand Beats Expectations, Even in Low-Penetration Markets

Annese said actual European EV demand has outpaced the company’s assessment from roughly a year ago. He singled out Italy and Spain — markets that have historically lagged on EV penetration — as showing a clear recovery in demand, giving Leapmotor additional room to grow.

Leapmotor International is a joint venture between Stellantis NV and China’s Zhejiang Leapmotor Technology. Stellantis holds 51% of the JV, which handles all of the Leapmotor brand’s business outside China. In May, the two partners announced a deepening of their cooperation to jointly develop electric vehicles.

Annese said he is in continuous discussions with Stellantis about potential sites for a future European manufacturing base. He noted that the Madrid plant is one option, but not the only one — locations outside Spain are also under consideration. With trade frictions escalating and tariff pressure not yet fully resolved, advancing local production is viewed as an important path to reducing policy risk and cementing market position. The company is currently assessing how to further activate its existing European capacity.

Market Implications

Autos and equities: The disclosure is a rare piece of good news for Chinese EV makers operating in Europe, where tariffs have capped volumes and compressed margins. It also matters for Stellantis, whose 51% stake in the JV gives it direct exposure to Leapmotor’s overseas growth and a potential template for its own low-cost EV strategy. A credible local-assembly plan would reduce the effective tariff burden and could lift sentiment toward both partners.

Trade policy: Annese’s framing of a hybrid-import agreement as an “alternative to tariffs” is significant. If Brussels moves toward negotiated quotas or hybrid-specific rules rather than pure tariffs, the regulatory cost of selling Chinese EVs in Europe could fall — but the terms would likely come with localization requirements, favoring players with existing European plants.

Commodities: Stronger-than-expected European EV demand, particularly in Italy and Spain, is incrementally supportive for battery-metals demand — lithium, nickel, cobalt and copper — though the volumes involved are too small to move prices on their own. It reinforces the structural demand narrative that has been under pressure from slower EV growth in Germany and France.

Currencies: Localized European production would reduce China’s export surplus in autos and shift some capital expenditure into the euro area, a modest medium-term positive for the euro and a mild drag on the yuan’s trade balance. The effect is small relative to macro drivers, but it adds to the trend of Chinese manufacturers building capacity inside Europe.

Bonds: Minimal direct impact. The more relevant channel is European industrial policy and any fiscal support for domestic EV manufacturing, which sits at the margin of euro-area sovereign spreads.

Key Takeaways for Investors

• Leapmotor’s European EV mix of roughly 90% is a strong signal that price-competitive Chinese models can win share even in markets with historically low EV penetration.
• Stellantis’s 51% JV stake makes it the cleanest listed proxy for this growth story; watch for concrete announcements on a European plant site, with Madrid among the candidates.
• A negotiated hybrid-import agreement could be less punitive than tariffs, but will likely be conditioned on local manufacturing — favoring companies with European capacity.
• Watch Italy and Spain EV registration data as a leading indicator of whether the demand recovery is broad-based or company-specific.
• Battery-metals exposure remains a second-order trade here; the near-term story is auto equities and trade policy, not commodities.