Giant Chinese automaker BYD has announced plans to issue enough of its stock to raise $2.4 billion to fund a massive increase in its production of lithium batteries.
Just under half of the cash raised is reported to be going into battery production, the rest into its own new-energy cars—which will all need lithium batteries.
Sales of EVs in China have rocketed, with the country aiming to put five million NEVs on the road by 2020, 60,000 of which BYD is hoping to provide.
In a bid to address the growing smog problem, in 2010 the government began five years of incentives to boost the market, including subsidizing purchases of new cars in the three smoggy cities of Beijing, Shanghai and Tianjin.
The Warren Buffet-backed BYD – which stands for ‘Build Your Dream’ – has certainly jumped on the battery bandwagon, announcing plans in March 2015 that it intended to increase its production capacity by 6GWh a year for the next five years.
The funding will be raised through equity placements—a method by which selected private investors are offered stock in exchange for venture capital to continue operations or fund growth as an alternative to going to the bank for loans.
In a statement to the Shenzhen stock exchange, the company said it would offer up to 261 million shares at a minimum of 57.4 yuan ($9).