Japan's Itochu to buy stake in EV startup Singulato: sources

FILE PHOTO: The logo of Itochu Corp is seen outside the company's headquarters in Tokyo, Japan, November 7, 2016. REUTERS/Toru Hanai/File Photo

BEIJING (Reuters) - Japanese trading house Itochu Corp 8801.T is to invest less than 1 billion yen ($9.05 million) in Singulato Motors, a Chinese smart, connected electric vehicle startup – a deal that might lead to further partnerships with Japanese automakers and suppliers, two people familiar with the matter said on Wednesday.

The two sources said that although Itochu's stake will be small, the deal should create opportunities for Singulato, in which Intel Corp INTC.O also already has a small stake.

Those opportunities could include cooperation with Japanese companies, including some of Japan’s automakers, which are scrambling to meet stringent Chinese production quotas for battery electric cars.

“This deal opens up for Singulato a possible deal for cooperation with one or two Japanese automakers or parts suppliers,” said one of the two people.

Both sources declined to be named because they are not authorized to speak with reporters.

Itochu did not disclose the size of its investment in Singulato. A Beijing-based spokeswoman for Singulato declined to comment.

Itochu said in a statement, made available to Reuters by one of the two sources, that it sees a rare opportunity for companies like Singulato to break into the automotive market thanks to its shift to electrified propulsion technology, which it said should shake up an industry still largely based on the conventional internal combustion engine.

Itochu plans to take advantage of its car marketing and retailing know-how and expertise to help accelerate Singulato’s development in China, which is emerging rapidly as a primary market for electrified vehicles.

Singulato plans to start producing and selling its first model, a fully-electric SUV called the iS6, by the end of 2018.

Writing by Nick Carey; Editing by Marguerita Choy