Stellantis builds sub-£20k Leapmotor EV in Poland as tariffs hit

Chinese EV maker Leapmotor has started production of the T03 electric city car in Poland after proposed EU tariffs came in higher than expected, executives have reportedly said.

Full production will begin in September, Leapmotor told analysts at an event last week, according to investment bank Jefferies.  

The 3.6m-long four-seater, a rival to the Dacia Spring EV, is one of two cars that begins Leapmotor’s entry into Europe after Stellantis paid €1.5 billion for a 21% stake in the firm and control over its exports.

UK sales of Leapmotor cars will begin in March 2025. 

Production of the T03 will be followed by the A12 compact SUV at Tychy, starting in the first quarter of 2025, Jefferies said.

The plant currently makes the petrol Fiat 500 and new Jeep Avenger and Alfa Romeo Junior.

Stellantis’s decision to build Leapmotor cars from kits in Europe follows the EU's announcement last week that Chinese EV makers would be subject to additional tariffs that take into account the increased levels of state subsidies handed to the Chinese EV industry. 

The European Commission said it was waiting for a response from the Chinese authorities before applying the tariffs, but if no resolution is forthcoming, Leapmotor exports would be taxed at 31% of the cost of the car.

“The tariff hike came slightly above the upper end of Leapmotor’s estimated range of 25%-30%, [so] the company now appears keen on advancing its localisation efforts,” Jefferies analyst Xiaoyi Lei wrote in a note.

Building in Poland will boost the gross profit of the T03 to 16% per car, compared with just 5% for imported models incurring the 31% tariff, assuming a €20,000 start price for the car, Jefferies said.

Stellantis CEO Carlos Tavares last week confirmed that "a certain number of [Leapmotor] products will have to be assembled in Europe" during the company's capital markets day presentation.

The decision on whether to build Leapmotors locally or import them from China had already been taken based on the level of tariffs applied, Tavares said, without indicating what tariff level would trigger the switch. 

Leapmotor executives have decided to import the bigger C10 electric SUV despite the tariffs, due to its more expensive price tag, Jefferies said.

News that Stellantis is moving fast with its plan to localise Leapmotor shows just how important this relatively unknown brand is to the multinational behemoth as it tries to increase the usability and affordability of EVs.