A relatively unknown Chinese electric vehicle (EV) startup has managed to surprise the automotive world with an enormous initial investment round.
This month VM Motors, based in Shanghai, announced that it had raised over a billion dollars in funding – a figure almost unprecedented for an automotive startup.
VM Motors itself was established by Freeman Shen, a former executive from Zhejiang Geely Holding Group Co., the Chinese conglomerate that bought Volvo in 2014.
“We have profound experience in the industry, which distinguishes us from other startup companies, even Tesla,” said VM Motors founder Shen in an interview with Bloomberg.
Despite the huge amount of funds raised, VM Motors is yet to release many concrete details about its plans.
Right now the company touts two ‘luxury’ and ‘executive’ sedan concepts, however these appear little more than renders, with no associated details.
Nonetheless, the car company is reportedly working on a mass market electric vehicle which it aims to bring to the market by 2018.
They have also set a target of 100,000 vehicles produced per year, but no information has been released on when (or how) they aim to achieve it.
An EV gold rush in China
The likely answer to how VM Motors has managed to attract so much investment, with so little product, lies in the market dynamics within China.
As part of its drive to reduce pollution and dependence on foreign oil imports the Chinese government is now heavily promoting battery electric vehicles.
This has led to a huge number of electric vehicle startups being founded in China, many of them backed not just by Chinese investment money, but also increasingly by foreigners as well.
Bloomberg reports that there are now over 200 EV startups competing to produce new vehicles in China.
Despite the huge investment sums, these Chinese companies are starting at a disadvantage, given their limited prior automotive manufacturing experience compared to their overseas competitors.