By Norihiko Shirouzu
BEIJING, May 15 (Reuters) - Chinese state-owned carmaker FAW Group has agreed to invest around $260 million in China-backed electric car start-up Byton as part of an ongoing series-B funding round, two people with knowledge of the matter told Reuters on Tuesday.
The deal was signed over the weekend in Nanjing where Byton is building its headquarters and production facilities as well as a technology centre, they said. Byton is looking to raise a total of about $500 million in the round.
Global and local automakers are making a major push to beef up their electric vehicle capabilities in China, the world’s largest car market, where the government is driving a shift towards cleaner new-energy vehicles.
Byton last year raised $240 million in a round of funding from investors including Chinese retailer Suning and Fullshare Holdings.
FAW did not respond to requests for comment.
FAW’s decision to invest in Byton comes in the wake of a signing in Beijing last month of a basic agreement for cooperation between the two companies.
The deal, in the pipeline for a while, comes at a time when Beijing is gearing up to scrap foreign ownership restrictions on new-energy vehicle or electric vehicle companies in the country by as early as the end of this year.
Some industry experts speculated the scrapping of those restrictions, which opens the door for companies such as Tesla Inc to produce cars on its own in China and sell them at more affordable price points, might weaken the business case for new electric car start-ups such as Byton.
Byton Co-founder and Chief Executive Carsten Breitfeld had said earlier that EV start-ups such as Byton would be able to compete against Tesla in China, even if the U.S. firm was able to manufacture cars in the market and bypass steep import tariffs.
As part of the cooperation deal, the two people said on Tuesday that FAW and Byton were also in discussion about cooperating on specific projects in product development and parts procurement. Byton is interested in gaining access to FAW’s supply chains for components such as EV batteries. (Reporting by Norihiko Shirouzu; Writing by Adam Jourdan; Editing by Himani Sarkar and Subhranshu Sahu)