AutoBeta(AutoBeta.net)01/16 Report--

On January 16, Xilai Automobile and GAC GROUP responded to the rumor that "GAC GROUP plans to invest 1 billion US dollars in Lailai Automobile."

GAC GROUP issued a clarification notice that the two sides have discussed the financing plan of NIO, but it is still at an early stage and has not formed any binding agreement. There is great uncertainty as to whether an agreement can be reached in the end. In the future, even if the Company participates, it is expected to invest in the form of part of its own funds through its subsidiaries, and the total amount of its own funds and funds raised is expected to not exceed US $150 million.

Xilai confirmed on its official website that GAC and GAC are exploring opportunities for cooperation, but the discussions are still in their infancy and no final agreement has been reached.

On January 15, several media reported that GAC GROUP planned to buy a stake in Lulai Motor, and GAC GROUP was raising money to invest in Lulai Motors, which is about 1 billion US dollars.

Rumors of GAC GROUP's stake in Lulai Motor quickly fermented, when its share price soared that day and triggered a circuit breaker, causing it to suspend trading on the New York Stock Exchange for several hours. After the resumption of trading, it still maintained double-digit gains. So far, Xilai Motor has risen more than 14.10%, with its share price at 4.29 US dollars.

As a new car-building power company, since its establishment in 2014, Lai Automobile has lost more than $6 billion, including a net loss of 3.285 billion yuan in the second quarter of 2019 and a net profit loss of 2.451 billion yuan in the third quarter. Xilai said in its third-quarter results that the company's cash balance was insufficient to provide for continued operations for the next 12 months and that a number of financing projects were under way, but that there was some uncertainty about the completion of the financing projects.

Xilai Motor is still burning money, so any financing project will attract the attention of investors, not to mention the huge investment of 1 billion US dollars, it is not surprising that its share price has soared.

In order to ease the financial pressure, Xilai has sold its Formula FE fleet and abandoned its plan to build a factory in Shanghai to produce cars instead of OEM.

In addition, in 2019, NIO also discussed financing projects with Beijing Yizhuang Guotou and Wuxing District of Huzhou, but there was no real progress. GAC GROUP, who was revealed that he planned to buy a stake, set up a joint venture with NIO as early as 2018 and unveiled its first model, the HYCAN 007, at the end of December 2019.

In the past 2019, the cumulative delivery of Xilai reached 20565 units, an increase of 81 per cent over the same period last year. However, Xilai is still in a state of continuous loss, and there is still a long way to go to break even.

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