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China EV war: Top 5 electric vehicle fundraisers to watch out for in 2021

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Alison Tudor-Ackroyd alison.t-a@scmp.com
·6 min read
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China's fundraising boom for electric cars looks set to continue through the Year of the Ox as the capital-intensive industry ploughs billions of dollars into new models, marketing and infrastructure across the world's largest car market.

The single largest investment by the auto industry in a century is well under way, as electric vehicle - known as new-energy vehicles (NEV) in China - start-ups ramp up production, while traditional carmakers such as Geely and Great Wall Motors switch to making EVs from petroleum-fuelled internal combustion engines.

The fundraising boom via special purpose vehicles, better known as SPACs, for new entrants is gathering momentum, said stock analysts. Lucid Motors is nearing a deal to go public via a SPAC, according to Bloomberg. Some incumbent players are attempting their own capital raises or monetisation efforts by ring-fencing or spinning out EV assets.

Get the latest insights and analysis from our Global Impact newsletter on the big stories originating in China.

Investors tend to see the new EV companies as having a greater growth potential but think the incumbents can lean on already meaningful earnings.

Explainer | As Tesla, NIO, Xpeng and BYD battle for dominance in China, which electric car maker has the slickest fundraising machine?

The fortunes of the founders and senior management of carmakers listing in Shanghai rest on investors' continuing love of NEV stocks as they cannot sell their shares during a lock-up period on the Star Market for several years. The 500-per cent surge in Tesla's share price has propelled chief executive Elon Musk to become the world's wealthiest man last month, beating fellow centibillionaire Jeff Bezos of Amazon.com. Here are some of the biggest upcoming fundraising drives and new entrants to watch in the industry in the coming months:

WM Motor EV model. Photo: Handout alt=WM Motor EV model. Photo: Handout

WM Motor Technology

The electric carmaker started the listing process on Shanghai's Star Market last year and recently completed the education phase of its IPO preparation. The unicorn, a privately owned company valued at more than US$1 billion, is deep in discussions with Chinese regulators about the timing of its IPO, but it is likely to make its debut in the first half of this year, according to a person familiar with the matter.

The company, which designs, manufactures and markets affordable battery-run EVs under the Weltmeister brand, recruited mainland brokerage China Securities to prepare for the IPO on September 30.

Unlike NIO and Xpeng, which chose to list in the US, Shanghai-headquartered WM Motor was always likely to plumb for a local listing, given its considerable hometown government support. China is keen to see its fast-growing local champions raise capital close to home.

Founded in 2015 by Freeman Shen Hui, the company has a manufacturing facility in Wenzhou, in China's eastern Zhejiang province, equipped with mass customisation capability and a capacity of 100,000 units a year. Another manufacturing facility is under construction in Huanggang, in Hubei province.

WM Motor is not short of cash ahead of its IPO, with an 11.5 billion yuan (US$1.78 billion) credit line from Chinese banks in February. Last year, WM Motor raised 10 billion yuan in a Series D funding round led by a Shanghai-based, state-owned investor group that included SAIC Motor, Baidu and Susquehanna International Group.

Aiways U5. Photo: Handout alt=Aiways U5. Photo: Handout

Aiways

The Chinese electric vehicle maker is also looking to make its debut on the Star Market, according to a person familiar with its plans.

Shanghai-based Aiways was founded in 2017 by the Chinese entrepreneurs Samuel Fu and Gary Gu. The company has a plant in Shangrao with an annual capacity of 300,000 vehicles, a research and development centre and a design centre in Shanghai, a battery factory in Changshu and a European sales centre in Munich.

The Aiways U5 SUV model has a range of up to 503 kilometre on a single charge, according to New European Driving Cycle data. The company did not respond to a request for additional information.

The Polestar 2 electric sedan displayed at a shopping centre in Shanghai, China May 5, 2020. Photo: Reuters alt=The Polestar 2 electric sedan displayed at a shopping centre in Shanghai, China May 5, 2020. Photo: Reuters

Geely Automobile Holdings

China's largest privately owned carmaker said in June that it plans to raise up to 20 billion yuan on the Star Market.

The Zhejiang-based carmaker, the owner of Volvo Cars and the largest shareholder in Daimler, has joined the crowd of traditional carmakers seeking to redefine themselves as technology players. Geely has plans to make 10 electric cars by 2025.

As part of the company's transformation, Geely formed alliances with Baidu, Tencent and Foxconn as it seeks to secure its position as one of the leading players in the future of transport.

Prospective investors should also note that Geely and several state-owned companies from Zhuhai have joined hands to bail out embattled EV maker Faraday Future, founded by the former internet Chinese tycoon Jia Yueting.

A view of the production line. Evergrande Group said it has put its first-ever electric vehicle, the Nevs 93, into production. Photo: handout alt=A view of the production line. Evergrande Group said it has put its first-ever electric vehicle, the Nevs 93, into production. Photo: handout

China Evergrande New Energy Vehicle Group

The car making arm of the world's most indebted developer has been preparing to sell A-shares on the Star Market, while tapping investors via the Hong Kong market.

The Hong Kong-listed company is controlled by China's third-richest tycoon Hui Ka-yan who plans to ramp up capacity at the firm's plants in Shanghai and Guangzhou to between 500,000 and 1 million vehicles within three to five years.

Late January, the firm sold 952.4 million shares at HK$27.30 each to six private investors, raising HK$26 billion. Some of the richest Hong Kong and mainland tycoons subscribed to the share sale, including Chan Hoi-wan of developer Chinese Estate Holdings and Liu Ming-hui, the founder of China Gas Holdings.

Before that, it sold 176.6 million of new shares in September in a top-up placing for HK$3.98 billion.

China Evergrande NEV unveiled six EVs in August under the brand Hengchi, then a Class B luxury saloon, a Class C coupe and a Class B SUV in February. It has yet to sell any vehicles.

The stock has risen 1,000 per cent to HK$69 since June 1.

Leapmotor T03. Photo: Handout alt=Leapmotor T03. Photo: Handout

Leapmotor

Leapmotor is also planning an IPO on the Star Market, according to local media reports.

Leapmotor was founded in December 2015 by Zhu Jiangming and Fu Liquan. The Hangzhou-based company raised 4.3 billion yuan in a Series B funding round in January, according to Crunchbase. In 2018, it raised seed capital from private equity fund Sequoia Capital China.

The company has three EV models, the T03, S01 and most recently, the C11. The company did not respond to a request for additional information.

Additional reporting by Daniel Ren

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2021 South China Morning Post Publishers Ltd. All rights reserved.

Copyright (c) 2021. South China Morning Post Publishers Ltd. All rights reserved.