HONG KONG / BEIJING (Reuters) – Last year, Wei Qing and his private equity team visited more than 20 production hubs in China.
The end result? They decide not to invest in any one.
"There is too much uncertainty since a company is telling history at an early stage, when it carries a sample car and raises funds to mass production," said Wei, Managing Director of Shanghai-based Sailing Capital.
His concerns reflect what bankers describe as increasingly difficult times to finance Chinese electric vehicle manufacturers who have to fight for attention in a crowded sector and give convincing arguments for future profitability despite the government Reducing the number of failures, who harass Tesla Inc. in its quest for sustainable profitability, as well as a dramatic drop in sales and problems with some of the cars of Chinese starter Nio Inc.
This year, Chinese power producers have collected only 783.1 million dollars by mid-June, compared to $ 6 billion for the same period a year earlier and $ 7.7 billion for all of 2018, according to the PitchBook data provider.
The congressional banker said there had been at least a dozen electronic producers looking for new funds but had to transfer most of them because they could not break away from the crowd.
Even fund-raising efforts that have left the country do not move as fast as electricity generators would like.
"This is a challenge," said the banker who began working on a fundraising this year. "If you can meet with investors, you can always tell a story, but some do not even meet your meeting requests."
He refused to be identified because the talks were not public.
The drive to master smog and launch its own automotive industry has said it wants so-called new energy vehicles (NEVs) that include hybrids, hybrids with built-in and fuel cell cars – one fifth of car sales by 2025 compared to 5% now.
These ambitions have led to an abundance of start-up EV companies that have competed not only with each other, but also with global carmakers and Tesla, which plans to start production in China this year. 19659016] About 330 EB companies are registered for some subsidy, government data show, although the number of better established startups is much smaller, about 50.
But against the background of criticism that some firms are too dependent from state funds Beijing cut subsidies, raise standards n They will be suspended after 2020
This has led to a sharp slowdown as car prices are rising. NEVs sales in May rose only 1.8% year on year compared with 18.1% in April and 62% growth in 2018
Experience in the current funding environment requires a lot of cost discipline, said Daniel Kirchett, Nanjing's CEO, Byton's electronics maker told Reuters
"Given the current situation, it's not enough for every start-up business to come up with good products and be quick on the market. to manage costs.
Byton, who is supported by the state auto FAW Group mobile phone maker and battery supplier Contemporary Amperex Technology Co. (CATL) is one of the few manufacturers to buy $ 500 million worth of EVs 19659022] Others include Leap Motor, backed by Shanghai Electric Group Corp and Sequoia Capital China, which is looking for $ 372 million, and CHJ Automotive, founded by serial entrepreneur Li Xiang, who wants to raise $ 500 million. 19659023] Those who have been successfully funded this year include WM Motor Technology Co Ltd, which is backed by Baidu Inc., which closed a $ 446m round in March, according to PitchBook.
Some have received money outside of private capital. E-Town Capital, a government investment company in Beijing, will invest 10 billion yuan ($ 1.4 billion) in a joint venture with Nio, which could help Nio build its own plant. The founder, Elon Musk, told Tesla employees last month that the $ 2.7 billion that the company had recently raised would give them only 10 months to break even at the rate of burning money in the first quarter. Shares of pioneers in the industry plummeted 32% in the year so far.
Nio refused to comment. Leaders of the EV industry are not performing well on the secondary market and this has put pressure on the sector's short-term prospects, "said Brian Gue, president of EV startup Xpeng Motors and former senior JP Morgan Banker
Investors become more cautious, selective and carefully focused on leaders, I think this trend is likely to remain, "he said.
Investor in WM Motor is weaker on the willingness of private investors to finance the industry. 19659034] "Nio is probably the best among Chinese start-up companies, and see where it stands now – how can this make us feel comfortable writing reviews of other startups?" said the investor who also owns Nio's shares, but sold them this year.
(Report by Kane Wu and Julie Zhu in Hong Kong and Yilei Sun in Beijing, Additional Report by Norihiko Shirouzu in Beijing, Editing by Jennifer Hughes and Edwina Gibbs)