Chinese NEV start-ups attract more investments as sales hit 6.89 million in 2022

Workers are busy on the production line of new energy vehicles (NEVs) at a factory of Chinese automaker Chery Holding Group Co., Ltd. in Wuhu City, east China's Anhui Province, Oct. 12, 2022.(Xinhua/Zhou Mu)

Workers are busy on the production line of new energy vehicles (NEVs) at a factory of Chinese automaker Chery Holding Group Co., Ltd. in Wuhu City, east China’s Anhui Province, Oct. 12, 2022.(Xinhua/Zhou Mu)

A growing list of Chinese new-energy vehicle (NEV) start-ups have triggered a new wave of fundraising activities lately, with the companies along the upstream NEV industrial chain found to be active investors.

The latest announcement was made on Monday by Zeekr, a premium NEV brand backed by Chinese auto giant Geely, which secured $750 million in Round-A financing, raising its valuation to $13 billion. The investors include Chinese EV battery giant Contemporary Amperex Technology (CATL), Israeli billionaire Amnon Shashua, the co-founder and CEO of autonomous vehicle technology firm Mobileye, and Yuexiu Industrial Fund, the investment arm of the Guangzhou government.

The proceeds from the funding will be mainly used in the research and development of Zeekr cars, the company’s overseas exploration and improvement of user experience, the automaker said on its official WeChat account.

The fundraising reflects investor confidence in the future prospects of NEV industry especially amid the complex environment, an industry insider, who asked to remain anonymous, told the Global Times.

“The market is discreet on such projects related to NEV manufacturing as the competition among the NEV makers becomes fierce,” he noted.

Zeekr’s current market valuation of $13 billion is higher than Guangzhou-based EV maker XPeng, which has a market value of $8 billion, according to Refinitiv Eikon data. But it is still behind Nio and Li Auto, with market valuations of f $17.22 billion and $25.22 billion, respectively.

Nio, XPeng and Li Auto are the trio of Chinese leading EV makers that went public in the US stock market in 2020.

Zeekr has outperformed others in the premium EV segment with prices above 300,000 yuan ($4,4000) and shipments of 72,000 units last year. It aims to launch two brand-new models and double the delivery in 2023. CATL has already been Zeekr’s backer prior to the fundraising.

Apart from Zeekr, CATL has also participated in the investment of Avatr, an EV brand launched by Chinese state-owned automaker Chang’an, tech giant Huawei and CATL in 2020.

In December last year, CATL signed an agreement with Avatr to deepen strategic cooperation. The battery maker has become Avatr’s second largest investor with 23.99 percent stake, following Changan.

Separately, Voyah, an EV brand owned by Chinese state-owned automaker Dongfeng Motor Corp, completed its Round-A financing in November last year, with valuation worth nearly 30 billion yuan. Its newly added investor include Ganfeng Lithium, China’s largest lithium compound producer.

The active investment from companies along the NEV industrial chain showed that the market still has ample opportunity for future growth as China’s NEV boom continues to gain momentum, the aforementioned inside said.

China has been the world’s largest NEV market for seven years in a row. Sales of NEVs continued to soar last year, driven by the rising market demand and the government’s supportive policy. Sales reached about 6.89 million units, rising 93.4 percent on a yearly basis, according to the China Association of Automobile Manufacturers (CAAM). The CAAM forecast that China’s NEV sales will likely grow 35 percent this year year-on-year to reach 9 million units.