(Reuters) -Stellantis NV reaffirmed on Wednesday it was studying closer ties with Chinese carmakers after Bloomberg reported it was nearing a deal to acquire a roughly 20% stake in electric vehicle company Zhejiang Leapmotor.
Leapmotor and Stellantis are also discussing setting up a joint venture as part of the transaction, the Bloomberg report said, citing people with knowledge of the matter, adding that a partnership could allow Stellantis to manufacture and sell some Leapmotor cars outside China.
The partnership would also give Stellantis access to the EV maker’s parts and certain technologies, according to the report.
Stellantis, whose brands include Fiat and Peugeot, has only a very small presence in China, the world’s largest auto market. The group and rivals such as Renault are concerned about growing competition from cheap Chinese electric cars in Europe.
In a statement, Stellantis said it had previously announced it was “studying scenarios to seize business opportunities linked to the dynamics of Chinese manufacturers in the context of the electrification of the global automobile market”, without elaborating.
Leapmotor, which has a market value of around 42 billion Hong Kong dollars ($5.4 billion), declined to comment. Its shares have gained some 22% this year.
The companies are hammering out the final details of a transaction and an announcement could be made in the coming days, Bloomberg said.
Stellantis is due to publish its third-quarter revenue figures next Tuesday.
The group said a year ago it was closing its joint venture that makes Jeeps in China with local partner Guangzhou Automobile Group amid disappointing results.
Leapmotor said last week its gross margin in the third quarter had turned positive, the first time for the startup even though the industry has been suffering a price war this year.
It is a goal the company has been striving for this year, mainly to improve its valuation with a view to a further fundraising, a person with direct knowledge of the matter said.($1 = 7.8215 Hong Kong dollars)
(Reporting by Akanksha Khushi in Bengaluru; Additional reporting by Gilles Guillaume in Paris, Giulio Piovaccari in Milan, Zhang Yan in Shanghai; Writing by Keith Weir; Editing by Shilpi Majumdar, Shweta Agarwal, Mike Harrison and Jan Harvey)