BAIC Electric Car Unit’s IPO Hits the Skids

The stock of state-owned BAIC Group’s electric-car unit plunged on its first public trading day, shedding 36.9% Thursday to close at 9.5 yuan ($1.38) a share in a backdoor listing.

BAIC BluePark New Energy Technology Co. Ltd., whose name was changed from ChengDu QianFeng Electronics Co. Ltd. — the shell company that the former used to go public — ended the trading day with a valuation of 32 billion yuan.

The backdoor listing followed an asset-swap deal early this year, in which ChengDu QianFeng, a real estate developer that has been under BAIC’s control since December, announced it would buy Beijing Electric Vehicle Co. Ltd., also known as BAIC BJEV.

Founded in 2009, BJEV has developed into China’s second-largest manufacturer of new-energy vehicles, a term the Chinese government uses to describe those using pure electricity, hybrid and hydrogen technologies. Last year, the company’s sales of such vehicles doubled to 103,000 vehicles, trailing only Hong Kong-listed BYD Co. Ltd., which sold 113,000 vehicles.

BJEV has been in the black since 2016, when it reported a net profit of 110 million yuan. The automaker has said its goal is to sell more than 150,000 new-energy vehicles this year, taking in 19 billion yuan in revenue. The company has raised more than 10 billion yuan.

Much of BJEV’s sales have been driven by the government’s years-long subsidy program as Beijing tried to get domestic automakers to leapfrog their Western competitors by promoting the use of electric vehicles. However, the company’s performance could face roadblocks in the future as Beijing has now hit the brakes on incentives, planning to completely phase out subsidies by 2020.

BJEV’s poor performance on its first public trading day mirrored the experience of Chinese electric-car startup Nio Inc. in its public listing earlier this month. The company's initial public offering price was just 1 U.S. cent higher than the bottom of its $6.25-to-$8.25 target price range. Nio ended up raising about $1 billion, well below its original fundraising target of up to $1.8 billion.

Contact reporter Mo Yelin (yelinmo@caixin.com)