Car rental and fleet rental company Car Inc. has entered an agreement to buy $81 million worth of stakes in FDG Electric Vehicles, effectively becoming its largest shareholder. FDG Electric Vehicles is a Hong Kong listed electric vehicle manufacturer. This transaction allows Car Inc. and its chauffeured car service unit Ucar to expand their business model into the electric car segment.
In the agreement, Car Inc. will buy nine billion shares of FDG Electric Vehicles at a price of HK$0.06. In addition they will subscribe convertible bonds in the principal amount of HK$600 million (US$76 million) at an initial conversion price of HK$0.06 per conversion share. The $81 million dollar investment will allow Car Inc. to own 22 percent of FDG Electric Vehicles. The company also subscribed to some convertible bonds, and when converted will give them roughly 37.32 percent shares of the company. Cars Inc. was established in 2007 and headquartered in Beijing. They are self-proclaimed China's largest car rental service provider with 726 service locations in 70 major cities and airports across China.
FDG Electric Vehicles' business model revolves around research, design, development, manufacturing and sales of pure electric vehicles, manufacturing and sales of lithium-ion batteries and cathode materials for said batteries. The company has a vehicle production base in Hangzhou, lithium-ion battery production bases in Jilin and Tianjin, and cathode materials production bases in Chongqing and Taiwan. The company has more than 700 acres of a fully functional production base in just Hangzhou. In a statement from FDG Electric Vehicles, "given that wave of electrification is the future of the auto industry and the Subscriber A (Car Inc.) is a leading auto mobility provider in China, leveraging the knowledge, network and assets of both companies might potentially unlock and generate synergy for both and create unparalleled opportunity for the company to expand our products into other segment and applications, thus enhancing the revenue and long-term development of the company." FDG Electric Vehicles obtained their permit to produce electric vehicles in 2015 from China's National Development and Reform Commission.