Stellantis is teaming up with a Chinese startup to sell electric vehicles globally

Stellantis, the global automaker that owns brands like Jeep and Chrysler has partnered with a Chinese start-up as the race for electric vehicles (EVs) continues to heat up.

The Dutch group announced on Thursday that it would purchase a 20% stake of Leapmotor (a Hangzhou based electric vehicle maker) for approximately EUR1.5 billion ($1.6 billion).

Stellantis and the Chinese manufacturer will form a joint-venture that will grant Stellantis exclusive rights to manufacture, export and market the vehicles of the Chinese brand outside Greater China. The first step is to enter the European market.

Stellantis, which holds a 51% share, will be in charge of the joint venture. Leapmotor, on the other hand, will hold a 49% stake. The new company expects to begin shipments in 2024's second half.

Stellantis will be able to use the 'cost-efficient ecosystem of EVs' created by the startup for its fleet goals. This includes a commitment to offer over 75 fully electric vehicles by 2030.

Chinese brands have attracted the attention of established automakers due to their ability to produce EVs quickly and cheaply, allowing themto charge consumers less.

Volkswagen announced in July that it had purchased a 5% stake in the Chinese EV manufacturer Xpeng, and revealed a strategic partnership for developing new vehicles together.

Last month,Reutersreported, citing unidentified sources, that Mercedes was in talks to invest in Chinese EV manufacturer Nio in exchange for use of the startup's R&D and technology.

Mercedes' spokesperson at the time told CNN that their CEO was engaged in "ongoing, regular dialogue" with industry leaders including Nio chairman. However, a Mercedes spokesperson said there were no plans to invest or work with Nio. The Shanghai-based startup has not responded to an earlier request for comment. Mercedes and Nio didn't immediately respond to Thursday requests for updates.

Stellantis announced its latest partnership about a month after terminating its joint venture with Guangzhou Automobile Group Company. This business had previously produced and distributed Jeep trucks in China.

Stellantis, who spoke on Thursday, said that the Dutch group had announced earlier it would adopt an 'asset light approach' to the country. This will continue even with the new partnership.

Stellantis will acquire Leapmotor's shares for 43.8 Hong Kong Dollars ($5.6) each, according to an announcement made by the Chinese company on Thursday. This represents a 19% increase over its closing price on Wednesday.

Investors were not impressed. Leapmotor's shares in Hong Kong fell 11% on Thursday following the announcement of the deal.