A little known Chinese electric vehicle startup will likely become the first of its kind to be saved by a government-led buyout. After shelving its plan to invest in struggling EV maker Nio, a county government of China’s eastern city of Huzhou is planning to take over Youxia Motors. Youxia’s chairman, Wei Jun, said in 2017 that the company would be “China’s Tesla,” but the company has yet to deliver a real car after five years of operation.
Why it matters: Chinese local governments have been strong backers of electric vehicle startups, in line with Beijing’s goal to be the world’s leader in clean energy transportation. Now, as the once soaring industry is deflating, some of them are finally biting the bullet with further bailouts.
Details: A fully state-owned urban investment corporation, controlled by the Wuxing district government Huzhou, is planning to acquire land from Youxia Motors. It will also take over its unfinished construction project, the government said in the minutes of a recent meeting published (in Chinese) last week.
- The regulator has approved a takeover plan submitted by Huzhou Wuxing City Investment Development Group, intended to “better utilize resources” and prevent the project from going into default.
- A coastal city in the eastern Zhejiang province, Huzhou is known for being a potential new backer of cash-strapped EV maker Nio with an RMB 5 billion bailout plan in October.
- The local government later confirmed it had held talks with Nio on the matter, but had dropped the plan, given a high investment risk.
- A spokeswoman of the district government declined to comment when contacted by TechNode on Thursday. Youxia Motors was not available for comment.
Context: Youxia Motors released an all-electric vehicle model in July 2015 after being set up for one year, the first among Chinese companies. However, it also gained a notorious reputation as the so-called “Youxia X” coupon model was almost completely converted from Tesla Model S.
- The company secured support from the Wuxing district government in 2017, striking a deal with local authorities to build an EV factory in the eastern Zhejiang province.
- Construction began later next year with plans for the series production of its first model in an annual capacity of 200,000 units in 2019. The company closed its latest financing of $350 million in Series B in August last year with no new investment since then.
- The government of China’s southwestern municipality Chonqing in October warned local banks to stop collecting payment from Lifan, a local OEM close to bankruptcy earlier this year, along with others. A debt commission was also formed under the support of the city government, Chinese media reported.
- Lifan posted a staggering net loss of RMB 947 million for the first half of this year. It sold a manufacturing plant with a license to EV startup Lixiang for RMB 650 million ($93 million) a year ago.