Chinese EV Manufacturer WM Motor Files for IPO in Hong Kong

Chinese electric vehicles startup WM Motor has announced plans to list on the Hong Kong Stock Exchange. This makes it the latest electric vehicle maker to list in Hong Kong city. Although the electric car maker didn’t reveal the amount of money it intends to raise in its initial public offering (IPO), sources say WM Motor has a target of around $1 billion.

Electric vehicle stocks have become extremely attractive in the past couple of years as climate change has forced countries around the world to turn their eyes to cleaner sources of energy and transportation. Tesla, for instance, became the most valuable car company despite having sold just a fraction of the vehicles automotive giants such as Toyota and Volkswagen have sold.

With China eager to cut down its immense carbon emissions, alternative-energy carmakers have plenty of room to grow, says Phillip Capital Management executive director Louis Wong. He says electric cars are expected to reach 20% of total vehicle sales in the country in the next couple of years.

Based in Shanghai, WM Motor revealed in the filing that it has sold 83,495 electric cars since launching its first model in 2018, much fewer than fellow EV startups Nio and Xpeng have sold. As of December 31, 2021, Nio had delivered 167,070 EVs while Xpeng had sold 137,953 electric cars. WM Motor sold 44,152 electric cars in 2021 alone, more than doubling its 2020 sales.

The company also reported an annual loss of 8.2 billion yuan ($1.28 billion) and annual revenue of 4.7 billion yuan ($704 million) in 2021. Earlier this year, CEO Freeman Shen said that the company expected Chinese demand for electric cars to rise, but they would have to deal with increased manufacturing costs because of COVID-19-related supply chain snags coupled with the global chip shortage.

According to WM Motor’s Wednesday filing, the EV maker’s proficiency in research and development, self-owned manufacturing facilities and mainstream market focus give it a competitive edge against other EV makers. As of December 21, 2021, the company spent 20.7% of its revenue on research and development (R&D) while Xpeng reportedly spent 19.6% of its revenue on R&D.

On the other hand, WM Motor had 3,952 employees compared to Xpeng’s 13,978 employees as of the end of last year. Some 24% of WM Motor’s employees work in research and development while 54.1% work in manufacturing. The Shangai-based EV maker currently has two manufacturing facilities in Hubei and Zhejiang provinces with a maximum yearly production capacity of 250,000 cars.

As more Chinese startups enter the EV space, entities such as Kandi Technologies Group Inc. (NASDAQ: KNDI) that trace their roots to China will have some stiff competition to contend with not only in China but around the world.

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