Baidu-backed EV-maker WM Motor raises $300m despite setbacks

Two Hong Kong-listed companies lead funding round for loss-spinning startup.

Despite a string of setbacks and increasing competition, the Baidu– and Tencent-backed electric-vehicle maker WM Motor Holdings has raised more than $300 million in new funding in a sign of continuing investor interest in the company.

Two Hong Kong-listed companies led WM Motor’s recent Series D1 funding round, including PCCW – backed by a son of local tycoon Li Ka-shing – and shipping and property company Shun Tak Holdings.

The loss-making WM Motor has been hampered by setbacks, including a stalled STAR Market listing and a vehicle recall over battery-related fire hazards.

“We are extremely honored to have been invested in by such renowned global investors, especially during this period of industry consolidation and rapid growth coupled with intensified competition,” said Freeman H. Shen, WM Motor founder and CEO, in a statement released on Tuesday.

The funding will be used for development of autonomous driving and other smart technologies, the statement said.

The EV startup is seeking yet more cash and said it expects to get an additional $200 million from as yet unnamed “prestigious international investors” in a D2 round.

Founded in 2016, the Shanghai-based company has raised capital 12 times, its filing to the STAR Market shows. As of late 2020, Baidu Inc. owned 3.67% of its shares, Tencent Mobility Ltd. had 1.54% and SAIC Motor held 1.45%.

Despite the continuing fundraising, the EV producer is yet to turn a profit. In the first nine months of 2020, it reported a net loss of over 3.6 billion yuan ($565 million), more than double the loss it reported in 2017, according to its exchange filing.

The company started the listing process for Shanghai’s STAR Market in September 2020 and completed the pre-listing work in January, but in April reportedly postponed the IPO.

A spokesman for WM Motor told Caixin that the plan to list domestically was unchanged and declined to comment on reports that the startup was mulling a listing on overseas capital markets.

A month after it started the IPO filing process, WM Motor recalled 1,282 vehicles due to potential fire hazards caused by battery problems after three of its Weltmeister marque EVs caught fire in Beijing and Fujian province within the space of a single month.

Official figures show that WM Motor sold over 22,000 cars last year, far behind its U.S.-listed Chinese competitors. NIO sold over 43,000 cars, Li Auto cleared almost 33,000 units, and XPeng reported sales of more than 27,000 units. The three were dwarfed by Tesla, which sold nearly 500,000 cars last year.

“We sold 29,043 cars in the first month of 2021, which already surpassed the sales volume for the whole of 2020,” WM Motor CFO John Bi said in a statement.

Competition is set to intensify for the EV startup as more tech giants rush to grab a share of the market.

Xiaomi Corp. set up its EV arm on Sept. 1 with a registered capital of 10 billion yuan and Lei Jun as its legal representative. Baidu completed a wind tunnel test for its electric car prototype in August. Huawei Technologies signed a deal in late July with an EV subsidiary of Guangzhou Automobile Group to develop luxury autonomous vehicles.

But the market is also ballooning. In August, new-energy vehicle sales in China hit a new monthly record, with over 320,000 units sold. This was 17.8% of overall vehicle sales, a market share very close to the government’s target of 20% by 2025.

Authors: MANYUN ZOU, Caixin, NIKKEI Asia

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