Dongfeng eyes $703 million in funding to expand Voyah EV brand

Dongfeng Motor Group Co. is considering raising about 5 billion yuan ($703 million) in fresh funds for its high-end electric vehicle brand, according to people familiar with the situation.

The Wuhan-based carmaker could seek a valuation of more than 20 billion yuan for Voyah Automobile Technology Co. in the funding round, the people said, asked not to be identified discussing a private matter. Dongfeng is working with an adviser to sound out potential investors, including an investment arm of Bank of China and state-owned China Chengtong Holdings Group, the people said.

Discussions with investors are ongoing and details such as the unit’s valuation and the proposed funding size could still change, the people said. Representatives from Bank of Chna, Chengtong and Dongfeng didn’t immediately respond to requests for comment.

Dongfeng plans to seek external funding for the luxury EV brand, according to an announcement last month on the Shanghai United Assets and Equity Exchange. Voyah had revenue of about 1.8 billion yuan and a net loss of 706 million yuan in 2021.

The EV brand was unveiled in 2020 during the Beijing Auto Show. Voyah may continue to lose money given its small production scale and soaring battery costs, while marketing and research and development expenses could remain high, Bloomberg Intelligence analysts Steve Man and Joanna Chen wrote in March.

Voyah also faces challenges from both domestic and foreign rivals, as traditional automakers and new EV makers are racing to strengthen their competitive edge with expanded production and sales. BYD Co. reported sales of 162,530 pure electric vehicles and plug-in hybrids in July, while Xpeng Inc., Li Auto Inc. and Nio Inc. each delivered more than 10,000 cars.