Some of China’s richest tycoons have poured billions of dollars into electric car companies in hopes of pushing China to become a global leader in the electric car market. But now, with car sales slowing and the government cutting subsidies, a reckoning seems to be coming. The flagship companies of China’s billionaires Ma Yun, Ma Huateng, Li Yanhong and Xu Jiadian have decided that electric cars will become “smart machines with wheels” that can connect passengers to the company’s other businesses.
China’s rich lay out electric cars
Sales in China’s electric car market are continuing to decline, forcing electric car makers to cut their profit outlooks. Rachel Miu, an analyst at DBS in Hong Kong, said the market for electric cars was on the verge of a downturn as China cut subsidies for electric vehiclepurchases to allow carmakers to compete on their own, and even the support of tycoons could not be stopped. “For companies that are new to the electric car industry, they’re going to climb a very steep hill. She said.
Financing and investors of Weilai, Xiaopeng Automobile and other companies
Here’s how the Chinese tech giants are laying out the electric car industry and the troubles they face:
Alibaba: Investment in Xiaopeng’s car accused of theft
After amassing a fortune of more than $40 billion, Mr Ma stepped down as Alibaba’s chairman in September, but retains his seat and influence. Ali was involved in a multi-round financing of Guangzhou Xiaopeng Automobile, including a 2.2 billion yuan ($313 million) round last year. He Xiaopeng, co-founder of Xiaopeng Automobile, is a former Ali executive.
Xiaopeng launched its first electric car last year: the five-seat SUV G3, which sold 11,940 vehicles so far this year. The company, which was founded in 2014, has also partnered with more established carmakers to build a plant with Haima, which produces 150,000 electric cars a year. Another plant should soon begin assembling the P7 sedan, which will be delivered next year.
However, Xiaopeng’s path is not without controversy, with some new engineers accused of stealing trade secrets from former employers in the United States. In March, Tesla sued a former company engineer, accusing him of uploading copies of Tesla files, catalogs and source code to a personal cloud storage account before leaving to join Xiaopeng. Similarly, a lawsuit is due to begin last year when Apple accused a former company engineer of stealing self-driving car secrets before joining Xiaopeng.
Xiaopeng Car G3 SUV
Xiaopeng Car denies any wrongdoing. “We are determined to follow the path of independent research and development, ” said Gu Hongdi, president of Xiaopeng Automobile. ”
Ali, Xiaopeng’s second-largest shareholder, has yet to comment. Xiaopeng Said on November 13th that Xiaomi Group was involved in another $400m financing round.
Tencent: Investined In Weilai Car Goes Public, Then Lay Off
Ma Huateng is China’s second-richest person, and Tencent, which owns the company, led the company in a $1 billion capital raising in 2017. The company, which has sold more than 26,000 vehicles, is one of the few Chinese electric car start-ups to produce several models and went on the market last year ahead of rivals.
However, as sales of All-Comee cars as a whole decline, the company invested in marketing and real estate, and The Company’s losses are increasing. The car sponsored concerts by the famous American singer Bruno Mars and opened a luxury club for the owners, with showrooms, cafes and performance space. In the year to August, Weilai opened 19 Ullai centres, with total rental costs equivalent to 6.3 per cent of revenues for the 12 months to March.
“The company has chosen a direct sales model, focusing on the user experience. The company has no plans to close its existing Ullai center or open a new Ullai center, it said.
Ullai Auto EP9
In the 12 months to June, The company’s revenue was $1.2 billion, but its share price fell sharply this year after losing $2.8 billion. When Tencent injected another $100m into The Auto in September, it already cut about 20 per cent of its workforce.
“Our sales have been under pressure since the subsidy cuts,” said Li Bin, CEO of Weilai Automobile. ”
Tencent has expressed support for the development of electric vehicles, but has yet to comment on the company.
Baidu: Investment in Viama car indicted
As Baidu’s CEO, Mr Li has incorporated Via car into Baidu’s plans to develop self-driving cars. Baidu this year led the company to raise 3 billion yuan in financing for Viacom, which owns 13 percent of The Wayhorse.
Rupert Mitchell, chief strategy officer at Wilma, said the company had delivered more than 19,000 electric SUVs last year. So far this year, Waymar has sold 14,273 battery-powered SUVs, lagging behind Buffett’s INVESTMENTs in BYD and Weilai, but ahead of Xiaopeng. Waymar unveiled its second SUV on November 22.
Waymar Automotive EX5
Mr Mitchell says Mr Mitchell has an advantage over companies founded by employees of internet companies. The founder of Viacom, Shen Wei, was in charge of Volvo’s China operations.
“We’re not trying to make mass-market cars halfway from the tech industry. Mitchell said.
Volvo’s parent company, Geely, has sued Waymar, demanding 2.1 billion yuan in damages for intellectual property infringement. Waymar has denied any wrongdoing.
Mr Mitchell said Wayam was producing cars at its wholly owned plant, which would help the company control the quality of its cars. Waymar will open a second plant next year, producing 150,000 cars a year and hoping to refinance $1 billion. Baidu declined to comment.
Evergrande Group: Unexpected entry has high hopes for electric vehicles
In the electric car industry, a more surprising entry is property developer Evergrande Group, which says it wants to become the world’s largest maker of new energy vehicles within three to five years. That means it will overtake Tesla, which has just opened a factory in Shanghai. Evergrande will invest more than $3.8 billion in electric vehicle-related companies from August 2018 to June 2019 and will begin production of Hengchi-branded cars next year.
Evergrande wants to build 10 production sites and plans to invest 45 billion yuan in new energy vehicles between 2019 and 2021. On November 10th Evergrande Health announced that it would invest nearly $3billion to increase its stake in NEVS (Swedish Ltd.) from 68% to 82%.
His answer is, buy and buy. “As long as we can buy the core technology and companies, we will buy.” He said.
Given the burning properties of new energy vehicles, Xu Jiadian’s strategy at all costs could have a financial impact on Evergrande. Evergrande’s $45 billion budget may have underestimated their commitment to electric cars, threatening to exacerbate Evergrande’s cash crisis.
“Given evergrande’s urgent need to maintain price cuts in order to boost cash revenue from home sales, this could affect evergrande’s profit margins for home sales.” Analyst Kristy Hung said in a November 22 report.