Electric Car Startup Byton in Talks to Raise Over $400 Million

Chinese electric-car startup Byton is in talks to raise over $400 million in its latest financing round, with state-owned automobile giant FAW Group being one of the major investors.

FAW is set to collaborate with Byton on many fronts, including car production, sales, and research and development, Byton President Dai Lei said last week.

However, the startup didn’t disclose FAW’s contribution to the “B” round of financing, which is expected to close by the end of June, but said it would be a “significant amount of money.”

The move is reportedly to elevate the 2-year-old Byton to a valuation of $690 million. The startup raised $240 million in August from investors that include Chinese retail giant Suning Group, as well as property and health care group Fullshare Holdings Ltd.

By partnering with FAW, China’s oldest automaker, Byton is expected to overcome regulatory hurdles as it doesn’t have a government permit to produce cars.

China started issuing permits to allow nontraditional carmakers to manufacture electric vehicles in June 2015, in a bid to foster competition in the world’s largest auto market, dominated by state-owned players.

But the initiative was suspended early last year due to concerns that too many players joining the fray might create a supply glut.

Byton is among a group of Chinese startups that have rushed into the burgeoning new-energy vehicle sector in recent years, as both the central and local governments have offered generous subsidies to promote growth of the sector.

Among an estimated 20 such startups launched since 2014, the 10 major ones had secured investments totaling more than 50 billion yuan ($7.7 billion) by the end of last year.

Byton’s financing efforts so far are dwarfed by three other prominent players — Nio, Xiaopeng, and WM Motor, which had raised 15 billion yuan, 12 billion yuan and 5 billion yuan respectively by the end of last year.

Nio is backed by social media giant Tencent Holdings Ltd. It has partnered with the state-owned Anhui Jianghuai Automobile to produce its signature ES8 model, slated for commercial launch this year.

Contact reporter Mo Yelin (yelinmo@caixin.com)