This article only represents the author's own views.
With the Lunar New Year coming up, the road ahead for Zhejiang Leapmotor Technology Co. Ltd (9863.HK) could be interpreted in two ways. Under one, a new HK$659 million ($84.3 million) investment by two state entities announced on Jan. 19 could be seen as a move of desperation, as Leapmotor begs for funds from local state-run entities to help offset its huge losses. Alternately, the new funding could be belated recognition that global auto giant Stellantis (STLA.US) was onto something last October when it bought a 20% stake in the company.
Before weighing these two scenarios in more detail, let’s review the deal announced last week. The two new investors, Jinhua Industrial Fund and Wuyi County Financial Investment, are state-owned entities in the city and county where Leapmotor builds its EVs, in a factory with an annual capacity of 200,000 units, according to its 2022 prospectus.