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

SHANGHAI, Aug 23 (Reuters) – Juneyao Group, the parent company of Chinese carrier Juneyao Airlines (603885.SS), plans to start manufacturing electric vehicles (EVs), two people with knowledge of the matter said, as it seeks to diversify. who have been hit hard by COVID.

Shanghai-based Juneyao, owned by Chinese billionaire Wang Junjin, his brother and nephew, is setting up an in-house team to explore electric vehicle manufacturing plans, said the people, who declined to be named because they were not allowed to speak to the media.

Plans are still at a preliminary stage, they added, but it would allow Juneyao to tap into a booming market that has been helped by generous government subsidies and tax exemptions.

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Juneyao did not respond to a request for comment.

Electric vehicles, including pure-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 (9868.HK) and Li Auto are fiercely competing with foreign players such as Tesla (TSLA.O) in the world’s biggest electric vehicle market, but Juneyao would join a growing list of top Chinese companies. plane with little or no automotive experience rushing into the sector.

Real estate group Evergrande (3333.HK), smartphone maker Xiaomi (1810.HK) and search engine giant Baidu (9888.HK) have started manufacturing electric vehicles under a government plan to lead the global automotive industry in electrification and automation.

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

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

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

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

AIR ACTIVITIES UNDER PRESSURE

The shift to electric vehicles is new business for Juneyao, the Chinese conglomerate that started selling flavored milk and yogurt to children in the early 1990s and later expanded to operate one of the world’s largest private airlines. of the country providing national and international connections.

China’s domestic travel market, which had rebounded rapidly from its successful containment of the COVID-19 virus at the start of the pandemic, is suffering heavy losses this year as authorities struggle to stop the spread of the highly transmissible variant of Omicron as part of a strategy to eliminate cases.

Nearly half of scheduled flights are canceled every day across China, according to third-party aeronautical data providers. Lockdowns continue to be abruptly implemented in different parts of China on COVID case numbers that are low by global standards.

Juneyao Air last month warned of a net loss of 1.6 billion to 1.9 billion yuan for the first half, when its main Shanghai hub suffered from a strict citywide COVID lockdown during two months and the number of thefts fell to the lowest in the company’s history, according to a regulatory filing.

($1 = 6.8386 Chinese yuan renminbi)

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Reporting by Zhang Yan, Brenda Goh; Additional reporting by Sophie Yu; Editing by Jamie Freed

Our standards: The Thomson Reuters Trust Principles.

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