The first few months of 2020 reflect a changing attitude among Chinese emerging car manufacturers, showing less optimism about the capital market as can be gleaned from recent developments.
For starters, Guangzhou Chengxing Zhidong Automobile Technology Co., Ltd, the main operating company of Xpeng Motors, reduced its registered capital from 383.6337 million yuan to 25.295048 million yuan on February 19, a dramatic 34.06% decrease.
Another significant development within Xpeng was the withdrawal of Henan Zhanxin Industrial Investment Fund (Limited Partnership) (one of CICC Capital’s investment entities) and Zhaoqing High-tech Zone Construction Investment Development Co., Ltd. (Yuecai Venture Capital Holdings – knowns as Utrust in English) from the ranks of Xpeng Motors shareholders.
For NIO Automobiles, things are no less dire. Documents submitted by Temasek Holdings to the United States Securities and Exchange Commission (SEC) on February 7 showed the reduction of Temasek Holdings’s shares in NIO to 139.09 million, with a 1.8% shareholding ratio. In February 2019, Temasek’s filing with the SEC showed that it held a 5.4% stake in NIO Automobile with 414.46 million shares.
Meanwhile, documents submitted by Hillhouse Capital to the US SEC this February 15 showed that Hillhouse Capital cleared all its shares on NIO Automobile as of December 31, 2019. Simultaneous to liquidating NIO’s stock, Hillhouse Capital showed increased involvement in biomedicine and Internet video companies. Hillhouse Capital moves indicated that it is headed towards a new direction in investments away from new energy vehicles.
Chinese Automobile manufacturing may have emerged as the fastest investment sector in the capital market but there are bumps on the road – flat or declining sales, increasing financial pressures as well as disappearing subsidies for new energy vehicles. By all indication, Chinese car makers are in for a bumpy ride this 2020.