Shanghai-based WM Motor on Tuesday announced the completion of a Series D round of financing at 10 billion yuan ($1.47 billion), the largest financing in a Chinese electric vehicles (EVs) developer by far.
The firm will deploy the proceeds to advance research and development of intelligent technologies, brand building, digital marketing and expansion of its distribution channel.
China’s rising EV market
The aspiring Tesla rival has reloaded ammunition to develop in China’s increasingly-competitive EV market, where investors build more confidence in the industry future as share prices of players like Tesla and Nio have surged in recent months.
Before WM Motor, major Chinese developers of climate-friendly vehicles have reached new milestones in fundraising. Xpeng Motors, backed by Chinese e-commerce major Alibaba Group, had raised about $500 million in late July and had reportedly roped in another $300 million from investors including Qatar’s sovereign wealth fund in early August before it filed for an initial public offering (IPO) in the U.S.
Li Auto, backed by Chinese local services platform Meituan-Dianping, raised $1.1 billion in an IPO on Nasdaq in July, which was the largest fundraise by a Chinese firm on the U.S. board since October 2018, comparable to Tencent-backed fellow Nio‘s $1.15-billion offering in September 2018.
Investors are expected to remain bullish on China, which became the largest EV market worldwide with nearly 1.1 million electric cars sold in the year of 2018, accounting for 55 per cent of the global market share.
The Chinese EV market is estimated to present a compound annual growth rate (CAGR) of 30.21 per cent between 2020 and 2028, according to a MarketWatch report released in August 2020.
Govt-linked investor base
WM Motor was created in 2015 by Freeman Shen Hui, who previously co-founded Chinese vehicle connectivity and telematics firm Pateo Group. In 2009, Shen joined Chinese privately-held automaker Geely as a Board member and group vice president, where he led the acquisition of Volvo Car Group in 2010.
The Series D round was jointly led by three state-owned investment platforms in eastern China’s Shanghai city, as well as Chinese state-owned automaker SAIC Motor, said China-based boutique investment bank Lighthouse Capital, the financial adviser of the deal, in a WeChat post.
A wide range of government-financed industrial funds across Chinese provinces of Hubei, Jiangsu, Hunan, Guangzhou and Anhui participated, along with other institutional investors including Sino IC Leasing; Tsinghua Unisplendour, a computer software unit of Chinese state-backed Tsinghua Holdings; China’s Hongta Tobacco Group; and Hong Kong-listed land developer Agile Property.
Sino IC Leasing is a financial leasing firm led by China’s “Big Fund,” which is formally known as China’s National Integrated Circuit Industry Investment Fund and invests in home-grown semiconductor development.
SIG China, the China arm of global quantitative trading firm SIG, also poured money into the new round.
EX5 crosses 30,000 sales volume despite COVID
WM Motor introduced its first smart, pure electric SUV model EX5 in September 2018 and recorded over 30,000 in total sales volume as of July 2020. In the first half of 2020, the firm added 46 new retail locations to increase its footprint in major cities, as well as second and third-tier cities in China, according to information on its website.
While most offline businesses in China were significantly disrupted by the COVID-19 pandemic, the company saw “positive sales momentum” – a 77.8 per cent growth in cumulative sales quarter-on-quarter in Q2 2020 with June sales reaching an annual high of 2,028 units, said the company in a statement on July 6.
Baidu, the firm’s long-time investor and one of its largest institutional shareholders, re-upped in the Series D round. The Chinese Internet search giant has forged in-depth cooperation with WM Motor to jointly develop level 3 and level 4 autonomous driving vehicles.
The two parties debuted their first car model powered by Baidu’s level 4 autonomous parking feature Apollo Valet Parking (AVP) earlier this month.
In March 2019, the firm had secured 3 billion yuan ($442 million) in a Series C round led by Baidu, with participation from Taihang Industrial Fund, a government-led fund in northern China’s Shanxi province, and China’s Linear Capital, which mainly invests in data intelligence and frontier technology.
It had recorded nearly 23 billion yuan ($3.39 billion) in total fundraising amount upon the completion of the Series C round, according to law firm Dentons, which facilitated the deal.