Five months after signing a strategic cooperation agreement, China FAW Group, one of the nation’s largest automotive manufacturers, is reportedly moving forward with plans to acquire approximately a 10% equity stake in emerging electric vehicle (EV) maker Leapmotor. This move is set to establish FAW Group as a strategic shareholder in Leapmotor, aiming for comprehensive resource synergy across the entire industry chain.

According to Chinese media Cailian Press on August 20, the proposal for FAW Group to acquire around 10% of Leapmotor shares is currently “circulating and advancing” within relevant departments at FAW.

The planned acquisition follows a “Strategic Cooperation Memorandum of Understanding” signed by China FAW Group and Leapmotor on March 3. This memorandum outlined a two-pronged approach: first, leveraging both parties’ technical expertise in research and development for the joint development of new energy passenger vehicles and components to enhance product competitiveness; and second, exploring the feasibility of deeper capital cooperation to achieve full industry chain resource synergy.

Just 20 days after the initial agreement, Leapmotor Technology Co., Ltd. was confirmed as the successful bidder for the “Hongqi brand G117 product complete vehicle joint development and platform licensing fee technology procurement” via FAW Group’s electronic bidding platform.

According to Leapmotor’s financial reports, their inaugural co-developed vehicle project with FAW Group has been launched, with subsequent work actively progressing. Insiders quoted by Cailian Press indicate that discussions are underway for additional vehicle cooperation projects, with the first Leapmotor-Hongqi co-developed model currently in development and slated for an overseas market launch in the second half of next year, utilising FAW’s international distribution channels.

Leapmotor’s financial performance in the first half of 2025 appears to be a key factor in FAW Group’s investment interest. The company reported a revenue of 24.25 billion yuan (3.37 billion USD), marking a 174.0% year-on-year increase. Its gross margin improved to 14.1%, up 13 percentage points from 1.1% in the same period of 2024. Furthermore, Leapmotor achieved a net profit of 30 million yuan (4.17 million USD) for the first half of 2025, turning profitable compared to the previous year.

About Leapmotor

Leapmotor is a Chinese startup automobile manufacturer that specialises in developing electric vehicles (EVs). The company was founded in 2015 and is headquartered in Hangzhou, China. In October 2023, Stellantis invested 1.5 billion euros to acquire approximately 20% of Leapmotor, making it a shareholder. Following the release of this news, its shares (09863.HK) rose by 1.6%, before retreating. As of publication, the shares were up 0.15%.

About FAW

FAW is China’s first automotive manufacturing plant, with its origins dating back to July 15, 1953, when it was established as the First Automobile Factory. Following the release of this news, its shares (000800.SZ) quickly surged by 10% (reaching the maximum daily gain permitted for stocks in its sector), before retreating. As of publication, the shares were up 6%.