Chinese Smart EV Unicorn Enovate Motors Bags US$742M

Enovate plans to go public next year and its pre-IPO round of financing is already under way

Chinese electric vehicle (EV) unicorn Enovate Motors has secured over RMB5 billion ($742 million approximately) in its latest round of financing. The round was led by local government guidance funds and large state-owned banks, the startup announced in a statement on Wednesday, without disclosing investor names.

The fresh funds will be used for research and development of new models, intelligent manufacturing, sales channel and service system construction, as well as marketing and promotional campaigns, the statement noted.

Enovate Founder, Chairman, and CEO Dr. Zhang Hailiang noted in the statement, “With the completion of the new round of financing, Enovate Motor’s subsequent new model development, retail space construction, service system improvement and brand marketing and promotion will accelerate.”

In April last year, Enovate had raised RMB2 billion ($298 million approximately) in its Series A funding round. As per Jumpstart’s estimate based on an older report by Equal Ocean, the current capital injection brings Enovate’s total funding to over RMB11.5 billion ($1.7 billion approximately).

Founded in 2015, the Shanghai headquartered startup focusses on intelligent green mobility. The startup has established its own R&D department to independently develop its entire vehicles, from styling chassis, and body, to electronic devices, new energy power, car networking, and autonomous driving technology.

According to Hailiang, “Through efficient and reasonable use of funds, Enovate is innovating and rapidly building a set of intelligent networked new energy automobile industry ecology.”

The latest financing follows the launch of the startup’s first model, SUV Enovate ME7, less than a month ago, while its second model is also ready for launch, according to the statement. The firm plans to launch one to two new models each year before 2023, the statement added.

Priced between RMB218,800 ($32,000 approximately) and RMB289,800 ($44,400 approximately) after subsidies, the startup claims ME7 to be an affordable option for the Chinese market. It is important to note, however, that Enovate’s competitors, which include Nio, Xpeng, and WM Motor Technology Group, offer cheaper options in the same segment.

According to the statement, Ennovate’s medium and large-sized SUV is powered by its in-house iMA intelligent digital architecture, and is equipped with five screens with instant interconnection, AI intelligent assistant, Face ME face recognition, ME Pilot intelligent driving system, and up to 84 intelligent technology configurations.

The latest financing will help Enovate accelerate the construction of its offline sales service networks such as Enovate Center, Smart Selection Space, Anxin Workshop, and Sujie Station to meet all-round needs for user brand experience, test drive, pre-sales and after-sales service, in line with its product and service-focussed business model, the statement noted.

It added that Enovate aims to complete opening 30 stores in 20 cities across China by the end of this year, and over 200 stores by 2025, covering all first-tier, second-tier, and some third-tier cities.

Moreover, during the same period, the startup aims to build a three-dimensional charging service system including fast charging stations, exclusive charging points for outlets, and public charging points.

The startup plans to go public in 2021 and has already began preparation for its initial public offering (IPO) with its pre-IPO financing round under way, the statement said.

The global pandemic has negatively impacted most businesses across the world, and amid the decreasing auto sales in China, the government released several incentive schemes to encourage the purchase of new energy vehicles (NEV).

For example, a subsidy of RMB10,000 was announced for all NEVs sold between March and December this year in Guangzhou, while a country-level subsidy due to be phased out by the end of this year was extended till 2022.

Moreover, the Chinese government also made commitments to invest in infrastructure to support the adoption of EVs, with the State Grid planning to build 78,000 charging stations at the cost of RMB2.7 billion this year.

The incentive schemes paid off, as the Chinese EV market rebounded, attracting strong investor attention with Chinese EV startups raising well over $8 billion this year, according to a Reuters report.

EV penetration in China is set to increase 4X from 5% in 2019 to 20% in 2025, according to a report by MarketWatch. Moreover, according to data from TechSciResearch, the Chinese EV market is set to grow from $74 billion in 2018, to $330 billion by 2024, a growth of over 28% CAGR.

Tesla’s recent success in China, is driving EV demand and sales for all domestic competitors as well, with JP Morgan betting on Nio as the long-term winner, according to a Business Insider report.

Header image courtesy of Enovate Motors

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Monika Ghosh
Monika Ghosh is a Staff Writer at Jumpstart

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