Tesla EV Rival Evergrande Raises $3.35 Billion to Compete With Elon Musk’s Company

By Mariliana Fotopoulou Monday, January 25, 2021

Shares of China-based Evergrande New Energy Vehicle Group exploded 67% on Monday after the electric vehicles (EV) company said it raised $3.35 billion to expand its business operations and production capacity.

Stock market chart on a computer screen.

EV Market Soaring

The business managed to sell 952.38 million of newly-listed shares to six major investors at a price of HK$27.30. Overall, the company raised HK$26 billion ($3.35 billion). The EV startup will use the raised funds to support technology research and development, production of new energy vehicle business, and repay older debt.

The company is yet to sell a single car unit; however, it is aggressively raising funds to ramp up the design and production of EVs. Evergrande New Energy Vehicle Group is controlled by entrepreneur Hui Ka-yan, whose ambitious plans are to raise production capacity up to 1 million vehicles within three to five years and challenge Elon Musk’s Tesla.

The price at which the EV startup sold its shares represents a 9% discount to the closing price on Friday, and the stake amounts to about 9.75% of the company’s enlarged capital. The latest set of investors includes Hong Kong entrepreneurs Chan Hoi-wan and Liu Ming-hui, who each invested HK$3 billion ($390 million) in the EV company.

Last year, the company raised $516 million from Tencent Holdings, Sequoia Capital, and other investors. Around the same time, the EV startup business unveiled six new electric vehicles under a brand called Hengchi. Evergrande said it hopes to start producing these cars this year.

In 2018, Evergrande made a strategic business decision to switch its focus from the business of healthcare to producing electric cars. In order to do so, Evergrande initially bought 45% of new-energy vehicle startup Faraday Future for HK$6.75 billion ($860.15 million).

The move helped the company to “obtain a strong competitiveness in the fast-growing new energy automotive industry, capture market share and diversify its businesses.”

Startup Savant reported last week that US-based EV Company Rivian raised $2.65 billion as it prepares to manufacture its all-electric pickup trucks later this year. The latest funding round, which values the EV business at $27.6 billion, was led by T. Rowe Price Associates.

Summary

China-based EV company Evergrande sold 952.38 million of new shares to Hong Kong investors to raise 26 billion Hong Kong dollars ($3.35 billion). Shares of the company skyrocketed today on this business news, while the offered price represents a 9% discount to the closing price on Friday.

About the Author


Headshot for author Mariliana Fotopoulou

Mariliana has an MSC in consumer analytics and business strategy. She has a special interest in fast-moving industries and big data.

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