Chinese airline owner Juneyao Group plans to enter booming EV market – sources

Chinese airline owner Juneyao Group plans to enter booming EV market – sources

SHANGHAI (Reuters) – Juneyao Group, parent of Chinese carrier Juneyao Airlines, plans to start manufacturing electric vehicles (EVs), two people with knowledge of the matter said, as it seeks to diversify businesses that have been hit hard by COVID.

Shanghai-based Juneyao, owned by Chinese billionaire Wang Junjin, his brother and nephew, is assembling a team in-house to explore plans to manufacture electric vehicles, said the people, who declined to be identified because they were not authorized to do so. talk to the media.

The plans are still in a preliminary stage, they added, but would allow Juneyao to tap into a booming market, helped by generous government subsidies and tax breaks.

Juneyao did not respond to a request for comment.

Electric vehicles, including electric and plug-in hybrids, accounted for 22% of sales in the first seven months of the year, according to Chinese industry data, the highest proportion among major global markets.

Established local brands Nio, Xpeng and Li Auto compete fiercely against foreign players like Tesla in the world’s biggest electric vehicle market, but Juneyao would join a growing list of high-profile Chinese companies with little to no automotive experience that are stepping in. in the sector.

Real estate group Evergrande, smartphone maker Xiaomi and search engine giant Baidu have started making electric vehicles under a government plan to lead the global auto industry in electrification and automation.

Juneyao on July 20 registered a company with 1 billion yuan ($146.23 million) of capital for businesses such as electric vehicle sales, auto parts research and development, and electric vehicle charging infrastructure operations, according to Qichacha, an information provider that uses official company registration sources.

An investment company controlled by Wang Han, son of the late Juneyao co-founder Wang Junyao, is also a majority shareholder in Yudo Auto, a Fujian-based electric vehicle maker, according to Qichacha. Chinese media reported that Yudo Auto’s share change appeared in official records on June 24.

Yudo Auto, founded in 2015 with support from the southern province of Fujian, is one of the few electric vehicle startups licensed by Chinese regulators, but it has been struggling to sell its cars and suffering losses.

Juneyao and Yudo Auto did not respond to a request for comment on the share change.

AIR BUSINESS UNDER PRESSURE

The switch to electric vehicles is a new venture for Juneyao, the Chinese conglomerate that began selling flavored milk and yogurt to children in the early 1990s and then expanded to operate one of the country’s largest private airlines, flying domestic and international routes. international.

China’s domestic travel market, which has rebounded quickly due to the successful containment of the COVID-19 virus in the early days of the pandemic, is suffering heavy losses this year as authorities scramble to stop the spread of the highly transmissible Omicron variant under a case elimination strategy.

Nearly half of planned flights are being canceled every day in China, according to third-party aviation data providers. The lockdowns continue to be implemented abruptly in different parts of China due to the numbers of COVID cases which are small by global standards.

Juneyao Air last month warned of a net loss of 1.6 to 1.9 billion yuan in the first half as its main hub Shanghai suffered a strict city-wide COVID lockdown for two months and the number of flights dropped to the lowest in the company’s history, according to a regulatory filing.

($1 = 6.8386 Chinese yuan renminbi)

(Reporting by Zhang Yan, Brenda Goh; additional reporting by Sophie Yu; editing by Jamie Freed)

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