Investors ploughing billions into China's electric vehicle sector

Investors maintain an optimistic outlook on the growth prospects of the new energy vehicle sector in China, with a constant stream of investment news emerging recently.

Changan Automobile's NEV brand Avatr announced on Tuesday that it had finished a Series C financing round, raising more than 11 billion yuan ($1.51 billion). It is the largest single example of fundraising in the domestic auto industry this year.

This demonstrates strong market recognition for Avatr's business model and achievements, reflecting confidence in its long-term strategy and prospects, the brand said.

Avatr will use the funds to speed up the research and development of new NEV models and hasten its brand building as well as finance the automaker's overseas expansion.

It has also initiated preparations for its public listing, aiming for an IPO in 2026, according to Avatr President Chen Zhuo.

Avatr, empowered by Changan, Huawei and CATL, has launched three models, with the fourth one scheduled for the second quarter of 2025.

In September, Avatr launched the 07, its third model and the first available in both pure electric and range-extended versions. Driven by the 07, Avatr's sales exceeded 10,000 units in October and November, respectively. November's sales surged 180 percent from 2023 to set a monthly record of 11,579.

Chen said that the range-extended model is the key to sales growth and all future products of Avatr will offer both power options.

However, the brand is not yet profitable. It suffered a net loss of 3.7 billion yuan in 2023 and another of 2.1 billion yuan in the first eight months of this year. The brand is expected to break even in the third or fourth quarter of 2025.

On Thursday, U Power, a Chinese manufacturer of NEV chassis, raised several hundred million yuan in Series B funding led by Hefei Industry Investment.

The funds will boost mass production of the Up Super Van, a complete vehicle model built on skateboard chassis technology, and enhance production capacity. It will also aid U Power's expansion in the electric commercial vehicle market and global chassis technology application.

Xuzhou Industrial Development Fund, a first-time investor to U Power, is confident in the company's future. The fund's manager said U Power, with its advanced technology and unique market position in skateboard chassis, will quickly expand and capture a larger market share in the NEV industry.

The company recently obtained European Union approval for its electric city logistics vehicle. It also initiated deliveries of customized complete vehicle chassis products to customers in the United States, signaling a new phase in international sales.

Currently, the company has more than 100,000 orders worldwide, with plans to expand into multiple regions and countries.

Nio CEO William Li said that Nio has raised $18.9 billion cumulatively even as the world has experienced a capital winter in recent years.

He explained that investors are attracted to Nio because of its financial transparency and visible investment in areas of technology research and development.

Over the past decade, the startup has invested about 53 billion yuan in technology R&D and amassed a total of 9,300 patents globally.

Nio's third brand, Firefly, debuted on Saturday and is set to be launched in the first half of 2025. Akin to BMW's MINI, Firefly targets the high-end small vehicle market, aiming to boost Nio's sales like its Onvo brand.

Li said with new products from the Onvo and Firefly brands, Nio aims to double sales growth in 2025 and achieve profitability by 2026.

The companies need more cash and external financing for future expansion and the investments will ensure smooth financing and lower liquidity risks, said industry experts.

Investments in the NEV sector can boost consumer confidence and attract more customers amid recent crises in some NEV startups, they added.