Chinese tech giant Tencent and ride-hailing platform Didi Chuxing will join a $516 million investment into an electric vehicle business belonging to the country’s biggest property developer, Evergrande Group.

Why it matters: By forging an alliance with tech giants and prominent venture funds, Evergrande is gradually becoming a contender in China’s crowded EV market.

Details: China Evergrande New Energy Vehicle Group, the EV unit of the property developer, said on Tuesday that it aims to raise around HK$4 billion (around $516 million) in a private placement of shares from at least six investors including Tencent and Didi.

  • The investor group will purchase a total of 176 million shares of the Hong Kong-listed EV unit, accounting for 2% of the company’s enlarged share pool. The shares will be priced at HK$22.65 each, a 20% discount to closing prices on Monday.
  • The company’s shares dropped 11.5% to HK$25.05 with a market capitalization of around HK$216 billion as of market close on Tuesday.
  • Top venture capital firms will also participate, including Sequoia Capital and YF Capital, a private equity firm co-founded by Chinese billionaire Jack Ma.
  • Evergrande said the proceeds will be used to finance its electric car-making business without revealing details. The Guangzhou-based real estate developer had recently set an ambitious annual production target of 1 million EVs over the next five years. It plans to launch six EV models ranging from sedans to crossovers in the second half of 2021.
  • Tencent has been a long-time investor in Chinese EV maker Nio.
  • Around 1 million EVs offered ride services on Didi’s platform as of last year.

Context: Evergrande marched into the automotive industry in mid-2018 with a $2 billion investment plan in the once-promising EV startup Faraday Future. The two companies soon fell into a dispute later that year before ultimately dropping litigation against one another in early 2019.

  • China’s EV market is starting to thaw after a year-long slump triggered by a drastic reduction in purchase subsidies and the Covid-19 outbreak. The industry recorded a 43% year-on-year jump in sales in August, thanks to strong sales from Tesla and cars from local EV makers.
  • Legacy automakers have initiated their EV offensive moves. BMW is planning to launch in China by year-end its first all-electric model iX3, a crossover with a driving range of 500 kilometers (310 miles) and a starting price of RMB 470,000 ($69,300).

Jill Shen

Jill Shen is Shanghai-based technology reporter. She covers Chinese mobility, autonomous vehicles, and electric cars. Connect with her via e-mail: jill.shen@technode.com or Twitter: @yushan_shen