Following Dongfeng Motor’s return to the A-share market for the “Yutu” brand, BAIC Blue Valley also opened a fund-raising for its high-end brands. On August 3rd BAIC Blue Valley announced that it had disclosed plans for a non-public share issue, which raised no more than 5.5 billion yuan. BAIC’s new energy-related person in charge told the Beijing Business Daily that the funds raised, after deducting the issuance costs, will be used for ARCFOX brand high-end model development and network construction projects, 5G intelligent network system upgrading projects, power exchange business system development projects and supplementary working capital.
According to the announcement, the issue of shares in the non-public offering is for no more than 35 specific objects, including BAIC Group and its controlling affiliates BAIC Guangzhou and Bohai Automobile. Among them, the number of shares to be subscribed by BAIC Group is not less than 29.57% of the actual number of shares issued in this non-public offering, and the amount of subscription is not more than 1.627 billion yuan;
It is understood that arcFOX brand high-end model development and network construction projects total investment of more than 4.2 billion yuan, including 3 ARCFOX brand high-end electric vehicle development, data construction and application projects and ARCFOX brand marketing network construction. About 2,628 million yuan of the funds raised were spent on high-end model development and network construction projects under the ARCFOX brand, the official said.
IN 2016, BAIC Blue Valley’s high-end brand ARCFOX was launched, but this year the brand’s first mass-produced model was only available for pre-sale. On April 22nd, ARCFOX AlphaT, the first mass-produced model under the ARCFOX brand, opened pre-sale, and on July 14th, the first full-process vehicle of the N61, the second mass-produced model under the ARCFOX brand, was launched. However, the ARCFOX brand incubating new cars at the same time, competitors Chang’an Automobile, Geely and other brands have also laid out high-end, which is slow to drop the product ARCFOX caused no small pressure. At the same time, the release and research and development of new cars need a lot of funds, but also let their own blood-making capacity is still weak BAIC Blue Valley face financial difficulties, financial results show that in 2019 BAIC Blue Valley deducted non-profit profit of -874 million yuan.
“In previous years, competitors have been widely distributed, compressing BAIC’s new energy survival space.” Yan Jinghui, an automotive industry expert, said that the post-subsidy era of high-end new energy models can bring profits to enterprises, so the layout of high-end is imperative.
It is worth noting that, in order to catch up with competitors as soon as possible, BAIC Blue Valley is developing self-driving features with L3-L4 classes based on ARCFOX brand N61AB models, using 5G and smart mesh technology. About 356 million yuan of BAIC Blue Valley’s fund-raising will be used for the 5G intelligent network system upgrade project.
In fact, with a large number of L2-class autopilot production models on the market, the L3 and L4-class self-driving cars have become the market for many enterprises. Last year, SAIC said the MARVEL X Pro was the first mass-produced model of the Rongwei brand to reach the L3 level of intelligent driving. Subsequently, Chang’an Automobile also said that this year will achieve 100% networking of new products and L3-class self-driving models mass production. Industry insiders said that the late landing time of the ARCFOX brand models, has been pulled by the opponent distance, so BAIC raised funds to speed up research and development of 5G intelligent network system behind, in order to increase the added value of high-end products, with a view to catching up with the competition after the market.
In addition, about 866 million yuan will be used for power exchange business system development projects. After the implementation of the New Deal on New Energy Subsidies, “power exchange” has become one of BAIC’s advantages in the new energy vehicle market. Yan Jinghui believes that the layout of the power station and post-maintenance need to invest a lot of money, BAIC is accelerating the layout.
It is worth noting that before BAIC Blue Valley opened its proposed capital raising, Dongfeng Motor announced its return to A-shares, and also opened up additional financing channels for its intelligent network layout and high-end electric brand “Yutu”. Industry insiders believe: “Under market pressure, layout of high-end market and digital transformation into the next battleground of independent brands, who can complete the layout in advance, who can take the lead in the future market competition.”