Volkswagen, the world's largest automaker, is reportedly in talks with a Chinese electric vehicle (EV) startup, Leapmotor, to use its technology on its Jetta brand.
Jetta is a sub-brand of Volkswagen in China, launched in 2019 to target young and budget-conscious consumers. It currently offers two gasoline models and one hybrid model, but Volkswagen wants to add some EVs to its lineup.
Leapmotor, founded in 2015, is one of the many Chinese EV startups that have emerged in recent years, hoping to challenge the dominance of Tesla and other established players. Leapmotor has two models on the market: the Leapmotor S01, a compact coupe, and the Leapmotor C11, a crossover. Both are based on Leapmotor's self-developed platform, which features a high-performance electric motor, a high-density battery pack, and a smart cockpit.
According to Reuters, Volkswagen is interested in using Leapmotor's platform for two new Volkswagen Jetta EVs, which would be produced by its joint venture with FAW Group, one of China's state-owned automakers. The deal is not finalized yet, but it could be a win-win situation for both parties.
For Volkswagen, partnering with Leapmotor could help it speed up its electrification strategy in China, aiming to sell 1.5 million new energy vehicles (NEVs) by 2025. NEVs include battery electric, plug-in hybrid, and fuel cell vehicles. Volkswagen has already invested in another Chinese EV startup, Xpeng, a strategic partner of its Audi brand. By collaborating with local innovators, Volkswagen can access cutting-edge technology and tailor-made solutions for the Chinese market.
For Leapmotor, working with Volkswagen could boost its brand recognition and credibility and provide it with financial support and production capacity. Leapmotor has sold about 13,000 vehicles since 2019, which is far behind its rivals like Nio and Li Auto. Leapmotor has also been looking for new sources of income by offering its platform to other automakers. Last month, it announced a new platform called L-Platform 3.0, which it claims can support various vehicles, from sedans to SUVs.
The potential partnership between Volkswagen and Leapmotor reflects the dynamic and competitive nature of the Chinese EV market, which is expected to grow rapidly in the coming years. According to the China Association of Automobile Manufacturers (CAAM), NEV sales in China reached 1.8 million units in 2020, up 10.9% from 2019. The CAAM predicts that NEV sales will reach 2.4 million units in 2021.
The Chinese government has been promoting the development of NEVs to reduce air pollution and greenhouse gas emissions and foster technological innovation and industrial transformation. China has implemented various policies to support NEVs, such as subsidies, tax exemptions, license plate quotas, and charging infrastructure construction.
However, the Chinese EV market is also facing some challenges, such as phasing out subsidies, intensifying competition from domestic and foreign brands, and rising consumer expectations for quality and service. Therefore, automakers need to innovate and differentiate themselves to attract and retain customers constantly.
Volkswagen understands this well. By partnering with Leapmotor, it is willing to adapt and collaborate in the fast-changing Chinese EV market. Whether this will pay off remains to be seen, but it is certainly a bold and interesting move by the German automaker.
