Wanxiang’s Purchase of Fisker Highlights Increasing Chinese Cross-Border Investment
A U.S. Bankruptcy Court judge approved Wanxiang Group’s bid for Fisker Automotive last Tuesday. The deal was a combination offer of cash and equity worth $150 million. Rather than simply incorporating the intellectual property and assets of Fisker into Wanxiang’s existing brands, the company plans to restart production of the Fisker Karma in a matter of months. Wanxiang previously bought the assets of Fisker’s battery supplier, A123 Systems, following its bankruptcy filing in October of 2012. Wanxiang believes the synergies achieved through owning both A123 and Fisker will result in stronger financial and competitive positions for both companies.
Wanxiang’s purchase of Fisker follows a positive trend among Chinese companies, who are increasingly looking outside of their border for potential acquisitions. Following years of little to no international acquisition activity, Chinese companies and investors began to acquire foreign companies at an increasing rate following an off-and-on start in 2008. Following this trend, 2013 was a landmark year in cross border acquisition by Chinese organizations, recording the largest number of deals to date. Hanergy has been a notable prolific foreign investor, scooping up distressed solar companies including MiaSole, Solibro and Global Solar Energy over the past two years. The global fall in solar prices has created a situation where Chinese enterprises can often acquire struggling foreign companies at a low price, helping them keep pace in the fast-growing cleantech space.
Wanxiang’s purchase serves to highlight the increasing interest from both domestic and foreign automakers in the growth of China’s electric vehicle market. Electric vehicle proponent and Tesla Motors executive Elon Musk was recently quoted as saying that Chinese EV demand will require a local factory in the future. China will also serve as one of BMW’s first launch markets outside their home country for the new i series of electric vehicles. While Tesla and BMW’s luxury electric vehicles may be unaffordable to many, companies such as China-based BYD are focused on bringing more affordable electric vehicles to market. Additionally, Nissan and Dongfeng have announced a joint venture to rebrand and sell the Nissan Leaf as another affordable electric vehicle option for China’s rising middle class.
In conjunction with the global increase in electrical vehicle investment comes the need for an expansive EV charging infrastructure. Companies such as ChargePoint and CarCharging are undergoing rapid growth as national charging networks are built out. While Western companies look towards the opportunity filled by the Chinese market (click here for a recap on Cleantech Group’s 2013 China Tour), Chinese investors themselves are increasingly looking abroad for innovating companies as potential M&A targets.
Gannon is a research intern at Cleantech Group for the spring term, providing the research staff with support across multiple cleantech industry groups specializing in energy storage and agricultural sectors. Gannon is a recent graduate of Michigan State University where he majored in Finance and Environmental Economics & Policy. He has previous research and policy experience from interning at a green consulting group in Bethesda, MD as well as interning for a state senator back in Michigan.