Caixin
Jan 20, 2017 06:15 PM
BUSINESS & TECH

Electric-Vehicle Maker Future Mobility Signs Deal for $1.7 Billion Factory

(Beijing) — Future Mobility Corp. (FMC), a Chinese electric-car startup backed by former executives from BMW and Tesla Motors, has agreed to build an 11.6 billion yuan ($1.7 billion) factory in Nanjing, its first major step toward actual production.

The plant expects to turn out the first batch of 150,000 electric SUVs in 2020, the company said at a signing ceremony with the Nanjing Development Zone on Thursday. Once completed, it will be able to produce 300,000 vehicles a year for the global market.

The smart-car aspirant began as a joint venture between tech giants Tencent Holdings Ltd. and Foxconn, both of which pledged 30% to the 1 billion yuan enterprise in early 2015. Hong Kong-listed dealership franchise Harmony Auto was set to hold the remaining 40% of the venture, which is registered in Hong Kong.

However, Tencent and Foxconn backed out late last year before injecting their cash. Harmony introduced new investors Leaguer Auto and Jinheng Investments to replace the two. Others holding small stakes in the venture include current FMC managers who were former executives at BMW, Mercedes-Benz, Google and Tesla Motors.

FMC also announced its new brand name, Zhixing, during the event, dropping the former title, which incorporated the Tencent and Foxconn names.

Future Mobility COO Daniel Kirchert said at a forum last week the two tech companies decided to withdraw from the venture due to restrictions on outbound capital. Sources told Caixin that the two also may have lost interest after learning that Auto Harmony President Feng Changge might be embroiled in a corruption case.

Neither Tencent nor Foxconn would comment on the subject.

FMC is just the latest of dozens of Chinese companies to engage in new-energy vehicle production in the last two years, spurred by Beijing’s goals to sharply boost the number of green cars on the nation’s roads. But many of those companies have produced inferior products or even no products at all, and the government is investigating many companies for alleged abuse of generous subsidies meant to support the sector.

Another major entrant is online video giant LeEco, which is building an 11 billion yuan plant in neighboring Zhejiang province that will have the capacity to make 400,000 vehicles a year upon completion in 2020. LeEco is also backing Faraday Future, a U.S. startup now building a factory near Las Vegas, that has promised to start delivering vehicles sometime next year.

Contact reporter April Ma (fangjingma@caixin.com)

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