Wei Lai Seeks Industrial Financing: The New Energy Investment Of Local Governments Is Cooling Down?

The new force of Chinese car making, which has been falling all the way, is the first vehicle in the world. It is eager for new financing to alleviate the financial pressure brought by huge losses and enhance the confidence of investors and investors. As the most financing force of the new car force, Wei Lai automobile, after listing, the market value is down all the way, and now it faces a "1 dollar delisting" crisis.

At present, the greater possibility of the new financing of Wei Lai vehicle may come from the government industry guidance fund. In October 14th, there were media reports that the new car manufacturer of China, the car coming from Zhejiang, was negotiating with Huzhou District of Wuxing, Zhejiang province for more than 5 billion yuan of financing intention, and will set up a factory with an annual capacity of 200 thousand.

In October 16th, in response to the news, the Propaganda Department of the Wuxing District Committee of Zhejiang responded, "negotiated, but there is no intention agreement." In view of the excessive risk of assessment, further discussions have been stopped. "

It is worth noting that this is not the first time that Wei Lai automobile has discussed cooperation with local industrial capital with government background. In May of this year, Wei Lai automobile revealed Yizhuang's 10 billion financing plan. However, so far, Wei Lai has not yet disclosed whether the cooperation has made substantial progress.

However, in the industry view, the government and industry guidance fund is becoming more cautious about the attitude of investing in new energy vehicles, and will have a more comprehensive judgement on the risks of industrial investment. It has always been at the top of the storm because of news such as burning money and losses. It is not easy to get financial support from local governments.

It is noteworthy that the enthusiasm of all parties to invest in the new force of China's automobile industry has come back to calmness. The power of Internet giants such as BAT and other leading Internet giants, VC and private equity is no longer pursuing new automobile manufacturing companies as in the past two years. The investment vision has shifted to the upper reaches of the new energy and intelligent network co production industry.

Before the sales volume of new car manufacturers has yet to grow, they will go through a longer period of "burn money" to achieve breakeven, which requires continuous blood transfusion. It is undeniable that financing is almost an instinct for the survival of new vehicles, and is also one of the most important survival skills.

Although this year, the outside world has questioned the new power of the car industry, but there are still many new forces that have been supported by the local government, but all the participants in the industry are becoming more cautious.

Embrace the advantages and disadvantages of local capital

In the past one or two years, we can clearly feel the changes in the financing environment of new vehicles. In the past 2017-2018 years, nearly 100 new car manufacturers born in China have shown strong attraction in the primary market. Every two weeks or even every week, a company announces the good news of successful financing. However, this year, the number of enterprises announcing new financing has been significantly reduced.

"From the financing point of view, the source of capital is different now. Two or three years ago, many VC, international capital, private equity and relatively high net worth individuals were chasing investment opportunities for new energy vehicles. Now institutional capital is relatively cautious, and domestic renminbi funds are much more cautious than before." In October 18th, Gu Hongdi, President of Xiaopeng automobile, said at the first new energy vehicle Capital Forum.

At the same time, the head effect is getting stronger and stronger, the long tail is gradually disappearing, and the financing focus is very high. Only a few head enterprises can attract financing.

In addition, capital markets are reassessing the value of new vehicles. "The valuation of financing at this stage has been greatly adjusted compared with the previous ones. In the past, the financing process has doubled or increased every time, and now we have a more reasonable expectation of valuation. " Gu Hongdi said.

Against this background, it is more difficult for new drivers to find suitable financing channels. In the past time, many local governments have great enthusiasm for new energy vehicles, and many places have attracted funds through industrial guidance funds.

A number of new car manufacturers have been funded by the government's industrial fund. For example, the 3 billion round financing of B round completed by the new energy company was led by the government industrial fund; there was cooperation between the Tongling open area and the singularity car; in May 2019, the Jiangxi development and upgrading guidance fund invested 300 million yuan in the special investment in the car, which was used for the construction of the Shangrao workshop and production line of 300 thousand new energy electric vehicles, as well as the research and development of new models and the layout of the national stores.

"The industrial characteristics of the automobile industry are not quite in line with the VC and the capital structure that we are talking about. Because the automobile industry has invested a lot in the early stage of the industry, and the risk is huge. It is different from the VC in general cognition. In October 18th, CFO, a real car, told reporters on twenty-first Century economic report.

In his view, the success of the new driving forces is inseparable from the support of the local government. The mode of participation of local governments has also changed from traditional land to resources to investment and to capital technology docking.

"If we want to do the auto industry in China, we have to match the national industrial policy and the local industrial policy in depth. The local government also has a strong desire to develop local economy, including demand for output value, employment and taxation, which is not the same as pure capital appeal. Zhang Ran told reporters.

For the new driving forces, investment in local government capital is equivalent to a closer strategic partnership with local governments, thereby facilitating its local development and the layout of its industrial chain.

However, for the new force of car making, it will also face some checks and balances of power. In order to reduce investment risk, government capital often has certain requirements for the company's dominant and discourse power in investment.

For example, in the cooperation with Tongling City, the singularity car needs to transfer the headquarters of the singularity car from Beijing to Tongling. In addition, directors and supervisors are stationed in Tongling Economic Development Zone, and financial personnel are appointed to supervise the company's finances.

Insiders told reporters that if the local government has strong control over the new force of the car making, in the actual operation, if the two sides run in bad shape, there may also be many contradictions and problems behind it.

Local government investment enthusiasm cooled?

China's new energy vehicle investment boom, which began in 2015, seems to be fading, but many cities are still working hard to become a new motor city.

In many local governments, new energy vehicles provide new opportunities for economic development. In this new car movement in China, few cars can be seen. Previously, China's automobile industry has formed an industrial structure dominated by the northeast, Beijing, Tianjin, Hebei, Yangtze River Delta and Pearl River Delta. However, in the new car movement, apart from the Yangtze River Delta's continued efforts to rely on the advantages of the industrial chain, some of the Midwest cities that had never appeared in China's automobile territory were extremely active, such as Shangrao, Ganzhou, Anhui and Tongling in Jiangxi.

It is worth noting that according to the new investment regulations of automobile industry, strict regulations for the production capacity of new pure electric vehicles in all provinces are put forward. Local governments in Zhejiang and Jiangsu are more active in this round of new energy vehicle investment, such as Wenzhou's car, Jinhua's Zero run car, Tongxiang's United Auto, Nanjing's Proton car, Suzhou's future car and Changzhou's ideal car. Due to the success of each province's capacity will have an impact on the production qualification, local governments need to consider many factors in the introduction of new energy projects.

From the perspective of technology, products, market and so on, two mass production cars have been sold, but now they do not have their own production bases, but are produced by Jianghuai. To a certain extent, it is a good investment target.

In fact, Huzhou has tried many times to introduce auto investment projects. Among them, the most widely known is the Mogan Mountain Mogan Mountain factory. In August 2016, the music super car factory project settled in Deqing County, Huzhou, and spent 419 million of the two land construction factories in Mogan Mountain. In addition, Huzhou has also introduced the Huzhou super factory project of Ranger car. The Wuxing District People's government and the Ranger automobile jointly set up a government industrial fund with a total scale of 5 billion yuan (including 400 million yuan of municipal financial contributions), which is specially used for the construction of Ranger automobile base.

However, once the momentum of the music as the car has fallen, the Ranger car started earlier, but also delayed the advent of product news.

It is worth noting that although China has nearly 100 new car manufacturing forces, the general consensus that the industry has formed is that only a few of the successful new car makers will eventually be eliminated.

There are bound to be a lot of failed projects in the new brands that are constantly pouring out, or the cars that are overweight. If they fail, they will pay a heavy price. This is a huge hidden risk of building a car.

Insiders told reporters that in recent one or two years, due to the emergence of more negative events in the new force of the car industry, the attention of the society has obviously improved. Some governments have already passed the examination and promotion of funds through professional investment institutions when they want to make relevant investments, so that they can make more marketable choices.

The key to the future of the new car force lies in the strength of technology and capital. Through the survival of the fittest in the market, who will be able to stand out in the new force of the new car manufacturers. Of course, the survival space of China's new car manufacturers is being squeezed in the face of traditional car companies continuously upgrading new energy vehicles and Tesla's Shanghai plant.

Over the past five years, the new force of Pan Po Kan's new car manufacturing is entering the stage of market competition. No one can see clearly the future of the "new car sports".