China-based technology giant LeEco has raised USD1.8 billion for its electric sportscar programme, reports Bloomberg. LeEco raised the funds from a group of Chinese investors, including Legend Holdings, Yingda Capital Management Co. and China Minsheng Trust. According to a report by news website e27, this is the largest first round funding ever for an automotive company.
Significance: The latest funding will give a major boost to LeEco’s goal to construct an electric vehicle (EV) plant. In August this year, it was reported that the company is planning to build a plant in China with an investment of USD1.8 billion. The plant is expected to have a manufacturing capacity of 400,000 units annually. The company had also showcased its new electric concept car ‘LeSEE’ at Auto China 2016.
Before unveiling the plan to manufacture an electric car of its own, LeEco had invested in US-based EV maker Faraday Future. LeEco is not the only start-up from China that is betting big on the electric and hybrid vehicle segment. In May this year, another Chinese start-up, NextEV, announced plans to invest USD465 million to produce EV motors in Nanjing, China. The tightening regulations related to emissions and fuel efficiency in China and the fast growing demand for alternative propulsion vehicles make the country a potential breeding ground for similar start-ups. Given the low entry barrier in the hybrid and electric vehicle space, especially for technology companies, the established automakers are bound to see strong competition from this new lot.
