Manufacturing News

BAIC aims to raise 3 billion yuan for electric-car venture

BAIC Group seeks to raise about 3 billion yuan ($460 million) in a financing round for its electric-car business, with plans to sell shares in the venture on Shanghai's exchange for emerging companies, according to people familiar with the matter.

Beijing Electric Vehicle Co., which is 60 percent controlled by BAIC, has attracted investments from technology companies such as Le Holdings (Beijing) Co., the sources said.

BJEV, as the venture is called, plans to use the funds from the initial public offering to cut debt, make investments and as working capital, according to the sources. The venture has three other founding shareholders besides BAIC, all of which are owned by the Beijing government.

Representatives for BAIC and Le Holdings declined to comment.

China has made electric vehicles a strategic initiative as part of its push to lead in automotive technology, curb pollution and cut dependence on imported oil. BAIC's financing plan follows BYD Co.'s filing last year to sell additional shares and raise funds for its new-energy vehicle business.

Global automakers also plan to cash in on the rising demand, with Tesla Motors Inc. seeking 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."

The automaker expects to boost EV sales to 55,000 units this year, up from 20,000 last year, according to Chen Ping, chief engineer of Beijing Electric Vehicle Co. By 2020, annual sales could rise to 700,000, he said.

The company is developing its first plug-in hybrid, which runs on a rechargeable battery backed up by a small internal combustion engine, Chen said in a January interview.

It's working with China Petroleum & Chemical Corp., also known as Sinopec, to provide battery replacement for EVs at its fuel stations.

Le Holdings is teaming with Aston Martin Lagonda to help bring its electric RapidE vehicle to market by 2018, providing the powertrain and battery pack. It also backs Faraday Future, the EV startup planning to manufacture its first car in 2017 at a $1 billion factory near Las Vegas.

Sales of EVs and plug-in hybrids in China tripled to 331,092 in 2015, according to the China Association of Automobile Manufacturers.

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