EV maker Aiways invests RMB 1.75 billion in Chinese OEM to accelerate production

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Aiways’s first EV model, the U5. (Image credit: Aiways)

Chinese electric vehicle (EV) company Aiways will invest RMB 1.75 billion (around $246 million) in domestic automaker Jiangling Holdings for a 50% stake to shorten the time to market for its first commercial model.

“China’s gasoline vehicle market has shifted to a lower gear. With the introduction of new strategic investor, Jiangling Holdings will speed up heading into the intelligent, new energy vehicle market,” (our translation) shareholder Chang’an Automobile said Wednesday in an announcement.

Shenzhen-listed Chang’an formed a 50-50 joint venture with state-owned car maker Jiangling Group in 2004 in central Jiangxi Province. However, sales of its SUV brand Landwind fell 60% year on year in 2018 on weak demand, according to a Yicai report. Both shareholders will reduce their stakes to 25% after the deal with Aiways, according to the announcement, clearing the way for Aiways to enter the market with a car production license.

Co-founded in 2017 by former Volvo China president Fu Qiang along with Gu Feng, ex-CFO of state-owned SAIC Motors, Aiways has raised around RMB 7 billion in total funding from investors such as Tencent, valuating the company at RMB 10 billion, said Gu in April last year. The company says it will deliver its flagship SUV model U5, released in November, to domestic consumers by year-end, then plans to be the first Chinese EV maker selling cars in Europe next spring.

However, public records show that only 15 domestic electric car makers so far have been granted production licenses by the central government, and untested EV makers including Nio and Xpeng Motors are conspicuously absent. Outsourced production and market entry through an acquisition have become standard industry practices in China. Another EV startup CHJ Automotive acquired a 100% stake in a Chongqing-based automaker Lifan Motors with RMB 650 million late last year.

Chinese authorities are drafting new rules to raise the barrier for entry to prevent the EV market, bolstered by government support, from overheating. According to a regulation released in December by China’s state planner, the National Development and Reform Commission (NDRC), EV companies under the production volume of 100,000 units per year are not permitted to build their own plants.

Nio reported a total of 17,550 vehicles delivered as of May 31 since it began selling its premium electric SUV model ES8 in June 2018, followed by WM Motor which sold around 8,000 of its EX5 model as of end-March. China’s largest EV maker BYD delivered more than 247,800 units in 2018, a 108% increase compared with the previous year.