Stalled Electric Vehicle Startup Byton Expects $292 Million Rescue
Stalled Chinese electric vehicle startup Byton Ltd. expects a 2 billion yuan ($292 million) financial lifeline from shareholders including the Nanjing city government, people familiar with the matter said.
The funds may enable the company to resume operations after a nearly three-month suspension caused by debt woes made worse amid the pandemic. The Nanjing city government preliminarily agreed to invest $150 million, and state-owned automaker FAW Group plans to inject $50 million, a Byton employee said.
A person close to Byton’s restructuring confirmed the reports and said some of Byton’s earlier investors were hesitant to take part in the new fundraising. Byton declined to comment. The Nanjing government didn’t respond to Caixin questions.
Byton still faces significant obstacles as most of its employees resigned. It is unclear how much money the startup really needs to commence mass production of electric cars. People close to the company said it hasn’t finished research and development on its first model, the M-Byte. Byton’s shareholders recently set a new production target of August 2021.
Established in 2016 by former BMW and Nissan Motor executives, Byton is among a group of Chinese startups that rushed into the burgeoning new-energy vehicle sector as central and local governments offered generous subsidies.
The company originally planned to start production in late 2019 in China and to enter North America and Europe around mid-2020. But Byton blew through those targets as the company failed to secure new funding. In June, Byton said it would suspend all China operations and furlough most employees for six months because of a capital crunch worsened by the Covid-19 pandemic.
Byton plans to raise the fresh money from shareholders through a newly established company known as Nanjing Shengteng, sources said. It is part of a restructuring plan backed by Byton shareholders including FAW, they said. Business records showed that Nanjing Shengteng was officially registered Sept. 9.
According to the registration records, Nanjing Shengteng has 1.5 billion yuan of registered capital from investors including Byton’s existing shareholders and a Byton executive.
A person close to the company said Nanjing Shengteng is working to raise the 2 billion yuan from Byton shareholders including FAW, a Nanjing government-owned company, battery maker Contemporary Amperex Technology Co. Ltd. (CATL) and retailer Suning Holdings Group Co. Ltd.
Bloomberg reported that in 2019 FAW agreed to invest $100 million in Byton’s Round C fundraising but changed its mind because of an unresolved debt dispute with Byton. FAW invested $260 million in a previous funding round in 2018, according to Reuters.
Contact reporter Han Wei (email@example.com) and editor Bob Simison (firstname.lastname@example.org).
Download our app to receive breaking news alerts and read the news on the go.
- MOST POPULAR