BAIC Group is expecting to raise about 3 billion yuan ($460 million) in a financing round for its electric-car business, and plans to sell shares and invest more on new electric vehicles (NEVs). (Photo : REUTERS)
BAIC Group is seeking to raise about 3 billion yuan ($460 million) in a financing round, as well as sell shares on Shanghai's stock exchange for emerging companies to support its electric-car business, China Daily reported.
Citing sources who asked not be named, the report said that Beijing Electric Vehicle Co. (BJEV), which is 60 percent controlled by BAIC, has already attracted investments from technology companies such as LeEco Holdings Co.
The report said that BJEV plans to use the funds from the initial public offering (IPO) to reduce its debt, make investments and use it as working capital.
The use of electric vehicles has been adopted by China as a strategic initiative to lead in the automotive technology, curb pollution and cut dependence on imported oil.
BAIC's financing plan was based on BYD Co.'s filing last year, which included the plan to sell additional shares and raise funds for its new-energy vehicle (NEV) business.
Global automakers also plan to take advantage of the rising demand for NEV, as Tesla Motors Inc. is reportedly looking for a local partner to start production in China.
"There shouldn't be a lack of investor appetite to back China's electric-car industry," said Steve Man, a Hong Kong-based analyst covering the auto industry at Bloomberg Intelligence. "China is resolute in tackling the environmental calamity that it's facing."
BAIC and LeEco representatives declined to comment on the development, the report said.
BJEV has three other founding shareholders besides BAIC, all of which are owned by the Beijing municipal government.
Chen Ping, chief engineer of BJEV, a majority-owned BAIC unit, said that BJEV's electric-vehicle sales may more than double to 55,000 units this year from 20,000 last year, and could reach 700,000 units annually by 2020.
Chen announced in January that the company is developing its first plug-in hybrid model, which runs on a rechargeable battery backed up by a small internal combustion engine.
The company is reportedly working with China Petroleum & Chemical Corp., also known as Sinopec, to provide battery replacement for electric vehicles at its gas stations.
On the other hand, LeEco is partnering with Aston Martin Lagonda Ltd. to provide the powertrain and battery pack for its electric RapidE vehicle, which they expect to bring to the market by 2018.
LeEco is also supporting Faraday Future, the electric-vehicle startup planning to manufacture its first car in 2017 at a $1 billion factory near Las Vegas.
According to data from the China Association of Automobile Manufacturers, sales of new-energy vehicles, which include plug-in hybrids, surged 3.4 times to 331,092 units in 2015, exceeding the industry growth for passenger vehicles.
