Deal focus: An EV ecosystem play

WM Motor Technology, a two-year-old Chinese electric vehicle (EV) manufacturer, has just unveiled the exterior design of its first product, the Weltmeister EX5 sport-utility vehicle, in Shanghai. When the owner approaches the vehicle, a welcome message and battery level will appear on the driver’s window. They can then open the door through facial recognition technology.

These insights into the Weltmeister EX5 came shortly after WM completed a Series B round led by Baidu Capital. The GP’s parent company Baidu also contributed capital, alongside SIG Asia, Chengwei Capital, and Ameba Capital. To date, WM has raised RMB12 billion ($1.81 billion), becoming one of the best-funded EV start-ups in China.

“We have built a strong exposure to the EV industry over the past two-and-a-half years, investing in the full value chain. We believe there will be a huge change in the entire car industry and EVs are going to play an important role,” says Andrew Teoh, founding managing partner at Ameba.

Shanghai-based WM was founded by Freeman Shen, previously a vice president at Chinese automaker Zhejiang Geely Holding. Ameba provided seed capital, while Chengwei led a Series A round last year which was said to be worth $1 billion. This enabled WM to recruit technology developers and secure land for its manufacturing facility in Wenzhou.

“Manufacturing costs for EVs are very high, which means continuous government subsidies are required,” adds Teoh. “The good thing is that WM has received significant government support, so it can scale up in a short period of time.”

WM plans to introduce three EV models by 2020 – by which point the Chinese government wants EV sales to hit two million, up from 517,000 last year. Competition is expected to intensify as traditional automakers and start-ups vie for market share.

WM seeks to differentiate itself in two ways. First, it targets the mass market, with a price of around RMB200,000 per vehicle, while other EV start-ups like NIO focus on the high-end segment. Second, it is looking to provide value-add services superior to those of traditional automakers, which don’t stay in contact with customers post-purchase.

The company has formed partnerships with internet and technology players such as Qihoo 360 Technology, Mobileye, NetEase AI and Baidu to focus on the development of automobile information security solutions as well as artificial intelligence technology. WM has also invested in bike-sharing operator Hellobike to extend its reach into short-distance transportation.

“This fits with our investments in the ecosystem. WM isn’t only a car manufacturer, but a ‘platform for traffic.’ It wants connects customers and electric vehicles through software. It’s possible the company will expand into electric car-sharing business in the future,” adds Teoh.

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• Topics
• Greater China
• Technology
• Early-stage
• China
• automobiles
• Transportation
• Baidu
• Chengwei Ventures Shanghai
• Ameba Capital
• Susquehanna Asia Investment