China's CHJ Automotive gets $530m Series C

A statement issued by Plum Ventures, an early-stage investor that backed CHJ in its angel round in 2015, did not identify other participants in the Series C. It noted that CHJ has raised $1.58 billion to date and has achieved a post-deal valuation of $2.93 billion.

The company completed a Series B round of RMB3 billion ($474 million) in early 2018, led by Matrix Partners China and Shougang Fund, an investment firm backed by state-owned steel producer Shougang Corporation. There were re-ups from existing investors Source Code Capital, department store chain Intime Retail Group, BlueRun Ventures, FutureCap, and Funcity Capital.

Known as Chehejia in Chinese, CHJ was established in July 2015 by serial entrepreneur Xiang Li (pictured), who previously set up Pcpop.com and US-listed Autohome.com. He also co-founded Nio, another electric car maker.

CHJ operates under the Leading Ideal brand. The first product, a six and seven-seat sports utility vehicle (SUV) priced at RMB328,000 and targeted at the mid to high-end Chinese family market, will be available for test driving in September. Mass production will begin in October with deliveries to come the following month. The project was launched in 2016 and road tests started last year.

China is one of the largest markets globally for EVs and hybrid cars, with EV sales said to be growing 60% a year. Well-funded start-ups in the space include Enovate, Xpeng Motors, Bordrin Motor, Skio Matrix, and WM Motor Technology. The industry has already delivered one IPO, with Nio making its New York debut last year. Only three companies, Xpeng, Nio and WM, have production model cars on the street.

Speaking to AVCJ earlier this year, Brian Gu, vice chairman and president of Xpeng, suggested that 90% of the new EV players will fail to reach the production stage or get absorbed by traditional carmakers. He believes companies trying to build lower-cost vehicles will come under the most pressure because they will not be able to compete with traditional carmakers that have massive volume and better relationships with suppliers. 

The phasing out of subsidies will also likely push China's EV industry towards a reckoning point as companies that don't have competitive products will be unable to survive.

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