has secured pre-IPO financing worth 7 billion yuan ($960 million), as the Chinese electric vehicle (EV) start-up prepares to enter the Southeast Asian market.
The Shanghai-based automaker announced the completion of the crossover financing round on Tuesday night, marking the first time it had raised new funds since July 2022. The names of the investors were not given.
According to two sources with knowledge of the company’s plans, Hozon, previously known as Neta Auto, is looking to raise US$1 billion through a Hong Kong IPO to finance its expansion in the local and international markets. Hozon opted not to respond.
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Before an IPO, crossover financing often gives a start-up extra time and resources to grow its business. Cross-financing agreements are typically negotiated between investors at a reduced rate in order to gain a foothold in the potential IPO.
Earlier this year, Hozon New Energy Automobile delivered 4,000 electric vehicles to foreign markets. Image: Weibo Earlier this year, alt=Hozon New Energy Automobile delivered 4,000 electric vehicles to foreign markets. Image: Weibo
Since the majority of Chinese EV start-ups are loss-making, raising money is crucial, according to David Zhang, a visiting professor at Huanghe Science and Technology College. “Promising companies will eventually survive a competitive market and gain market share with enough funding.”
According to the annual report of 360 Security Technology, one of the EV company’s investors, Hozon reported a net loss of 6.9 billion yuan in 2022, which was 138% higher than a loss of 2.9 billion yuan in the prior year.
Hozon, a 2014 startup, trails Nio, Xpeng, and Li Auto, three electric vehicle start-ups regarded as China’s best chances to take on Tesla in the country’s core.
These three businesses are all listed in both Hong Kong and New York and are supported by significant investors like Tencent Holdings, the company behind China’s largest social media platform, and Volkswagen Group, a leading automaker.
Hozon produces EVs under the Neta brand in China and markets them domestically and internationally. The company’s vehicles fall under the category of inexpensive electric vehicles (EVs) in China, which are marketed to middle- and low-income drivers who prefer battery-powered automobiles over vehicles with gas-guzzling internal combustion engines. The Chinese name Nezha, a guardian deity in Chinese mythology, is also spelt as Neta.
Hozon shipped 10,039 units to Chinese customers in July, a decrease of 17.3% from the previous month. It came in at number 13 among all EV brands in China, which includes both EV-only manufacturers and automakers that produce both gasoline- and electric-powered vehicles.
Hozon started building its first Southeast Asian facility in Bangkok in March with the intention of assembling 20,000 EVs annually by the end of 2024.
With its Indonesian partner Handal Indonesia, the business announced early this month that it will create an electric vehicle with a right-hand drive and the Neta name. The project intends to begin production in the second quarter of 2024.
The flagship Neta S sedan, the small sports utility vehicles Neta U-II and Neta V, and right-hand-drive versions of those vehicles, built in China, are now being ordered through an Indonesian Hozon sales office.
Hozon exported around 8,000 vehicles overseas in the first seven months of 2023. Hozon was co-founded by Zhang Yong, a former executive with state-owned Chery Automobile and Beijing Automotive Group’s EV division.
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