FAW would emerge with a 5% stake in Leapmotor, the company said in a filing Monday. The deal is pending approval from China’s securities regulator, which could take several months.

The deal may be a sign of consolidation speeding up in China’s crowded EV sector, where more than 100 brands offer hundreds of models at a time when demand growth is slowing.

The overcapacity has led to a long-running price war that has depressed profitability all along the auto supply chain. Authorities have encouraged state-owned manufacturers including FAW to consolidate to boost competitiveness.

Leapmotor, which also runs a joint venture with Stellantis NV to distribute vehicles globally, is one of few Chinese EV makers that has started to turn a profit.

Its affordable family friendly sport utility vehicles have grown in popularity, with sales in the first 11 months of this year doubling a year earlier, allowing it to exceed its annual sales target of 500,000 cars ahead of time.

Founder and CEO Zhu Jiangming said the company has set a goal to sell 1 million vehicles next year, and intends to reach annual sales of 4 million within the next 10 years, according to a company Wechat post on Sunday.