Nissan's intention to acquire 25% of the shares of New Power

On May 14, Bloomberg reported that Nissan was considering acquiring about 25% of the shares of Chinese electric vehicle manufacturers, including WM Motor, Hozon Auto and CHJ Automotive. As of press time, Nissan and the three electric vehicle companies had not commented on the matter. 

Since the second half of last year, China's passenger car consumer market has begun to experience slight or even negative growth. Auto companies have started a new round of reforms in the cold winter. With the help of the Matthew effect, the established pattern has been broken, and many auto companies have begun to look for a way out for their future. 

Introducing capital, being acquired, selling qualifications, whether it is an active move to survive or a helpless move, if the Bloomberg news is true, then Nissan's acquisition of shares in new car-making forces is undoubtedly a relatively special example in the transformation of China's automobile industry. BC reporters believe that in the future, this kind of cross-holding between companies will gradually become more frequent.

Nissan's Golden Abacus

In this equity acquisition case, there are two key points. One is that the second party of the transaction is a new car-making force that has emerged this year with new energy vehicles as its core. The second is that the equity ratio is clearly stated to be 25%.

Two flowers bloom, each showing its own beauty. 

Under the pressure of global automotive industry policies and corresponding domestic policies, major auto giants have begun to transform from traditional fuel vehicles to new energy vehicles. Previously, the executives of the three major German auto giants held consultations and finally reached a consensus on the future strategy of the automotive industry. Volkswagen Group, Daimler Group and BMW Group unanimously decided that the future belongs to electric vehicles. 

The three giants also agreed to focus on electric vehicles, including pure electric and hybrid, in the next 10 years, and they will take coordinated actions in infrastructure construction, subsidy policies, technology, etc. This plan will also become a common position of automakers, VDA, and the German government. 

Auto giants such as Volkswagen and Mercedes-Benz have invested billions of dollars to fully transform into new energy vehicles. Currently, Nissan Leaf's cumulative sales have ranked first in the global new energy vehicle sales rankings, but its new energy vehicles seem to be a bit unsuitable in China, and sales are not high. Tesla, Volkswagen and other companies have increased their investment in China's new energy market. Nissan's new energy strategy in China must take action. 

On the other hand, for the Chinese market, the dual-point policy officially implemented last year has also become a major pressure for Nissan's development in China. 

According to the public information, Dongfeng Nissan's parent company Dongfeng Limited did not meet the points policy last year. The actual value of average fuel consumption in 2018 was 6.26 liters per 100 kilometers (6.06 is the standard value). Although there was a surplus of 52,423 points in new energy vehicle points, the average fuel consumption points were -264,191 points. 

It is worth mentioning that in a new energy joint venture, each party must hold more than 25% of the shares in order to obtain new energy credits. This means that for an enterprise that invests in a new energy joint venture and holds more than 25% of the shares, it can obtain new energy credits from the new energy company. 

In terms of shareholding ratio, 25% is a red line, which is another key point in Nissan's acquisition. If its new energy joint venture can develop in the long run in the future, it will undoubtedly be a timely help for Nissan to cope with China's new energy double points policy. 

Currently, Nissan is facing internal and external troubles. Its key figure, Carlos Ghosn, is in prison. The internal conflicts of the entire Renault-Nissan Alliance have not been resolved, and it is impossible for the Renault-Nissan Alliance to go all in on new energy like the Volkswagen Group. Choosing to invest in new energy vehicle companies is undoubtedly a shortcut to deal with China's policies. 

So, among the three rumored companies, which one is most likely to be favored by Nissan?

It is a multiple choice question and a true or false question.

According to Bloomberg, the potential targets of this equity acquisition are among WM Motor, Hozon Auto and CHJ Automotive. 

For new car manufacturers, money is undoubtedly the most critical factor. But at this moment, Hozon Auto may be the one that lacks the least money. 

At the Shanghai Auto Show last month, Zhang Yong, president of Hozon Auto, announced that the company had just completed a round B financing of 3 billion yuan, led by a government industry fund and followed by strategic investment capital. Most of the funds from the round B financing will be used for future automotive product and technology research and development, and to accelerate the implementation of innovative technologies in smart cockpits and smart driving. So far, Hozon Auto has raised more than 7 billion yuan in total. 

It is worth noting that the current largest shareholder of Hozon Auto is Yichun Jinhe Equity Investment Co., Ltd., with a shareholding ratio of 51.31%. The shareholder of this investment company is Yichun Jinyuan Investment Co., Ltd., which is actually one of the three holding companies under the Finance Bureau of Yichun Economic and Technological Development Zone. 

This also means that in the current equity structure of the company, the major shareholders are government funds and industrial funds. To a certain extent, Hozon Auto has some meaning of state-owned assets. At this time, absorbing overseas funds again will involve cumbersome procedures, and its significance is far beyond ordinary equity acquisitions. In this way, the probability of Nissan acquiring a stake in Hozon is not very high. 

On April 9, WM Motor officially announced its delivery volume in the first quarter of 2019 - a total of 4,085 vehicles, of which WM EX5 sold 1,706 units in March, surpassing NIO for the first time in monthly sales and becoming the new sales leader among new car manufacturers. In addition to announcing the delivery volume, WM Motor also stated that it had started delivery work in 29 cities across the country in the first quarter. It has to be admitted that compared with other new car manufacturers that are still investing unlimitedly, WM Motor has a certain ability to recover at this time. 

Since its inception, WM Motor has emphasized the scale effect. In an interview, Shen Hui even said that 100,000 vehicles are the lifeline of new car companies. In 2019, WM Motor, which built its own factory, set a sales target of 100,000 vehicles. Although it seems far from the target at this time, WM Motor, which is priced affordable and focuses on capturing the third- and fourth-tier consumer markets, still has the possibility of "reaching the target". 

On the other hand, WM Motor scored 39,771 points and 27,986 points respectively in the double points calculation in 2018. As its sales continue to expand, this number will also rise to meet Nissan's needs.

For CHJ, Li Xiang’s personal halo is far greater than the products. 

From the very beginning of Pcpop.com, to Autohome and now Ideal Auto, Li Xiang's entrepreneurial journey seems to always be unwilling to "associate with others". After all, making cars is a costly thing, and exchanging equity for development should also be an option for Li Xiang. But for Nissan, perhaps CHJ Automotive, which currently has a negative performance, is not the best choice.