BEIJING -- Japan's Itochu Corp. has invested nearly $100 million in Chinese electric vehicle maker Singulato Motors, lifting its stake to about 7 percent, with plans to increase the holding if the startup meets certain conditions, two people familiar with the matter said.
The Japanese trading house, which owned around 1 percent of Singulato last year, could pump an additional "few hundreds of millions of dollars" into Singulato to become its No. 2 shareholder, one of the people said.
But that plan is dependent on Singulato accelerating development of its first model, an electric crossover called the iS6, and making proper preparations for an IPO, the person added.
The iS6 had been slated for a launch earlier this year but has faced some delays, the source said without elaborating.
The investment is a shot in the arm for Singulato. While it is valued at $3.5 billion according to China's science ministry and is one of the more high-profile EV startups in the world's biggest auto market, Singulato, like many of its peers, faces a much tougher funding environment.
Not only have investors been put off by Tesla Inc.’s struggles to become profitable, as well as lackluster sales at fellow Chinese EV startup Nio Inc., the sector is also grappling with government cuts to subsidies and plans to phase subsidies out altogether.
Sales of so-called new energy vehicles in China, which include EVs, contracted for a second straight month in August, due to the cuts to subsidies.
A Tokyo-based Itochu spokesman said the trading house had recently made an additional investment in Singulato but declined to specify the amount except to say it was a minor investment.
Asked if Itochu has conditionally agreed to further hike its investment, he said there were no such plans and declined to comment further.
Singulato's biggest shareholder is Shen Haiyin, its co-founder and chief executive, with a stake of about 29 percent. Its No. 2 shareholder, with a 16 percent stake, is a company that holds shares for Singulato employees.
Itochu this year formed a partnership with New York-based ride-sharing company Via Transportation Inc.
The two people familiar with the matter said Itochu and Singulato might cooperate in China to offer mobility services which may include Via.
The deal with Itochu follows an agreement in April for Singulato to purchase electric car technology from Toyota Motor Corp. -- one that allows Singulato to accelerate development of a planned mini EV, a second vehicle for the startup.