Carmaker BYD will buy an 18 per cent stake in a Tibet-based lithium and boron miner for 201.2 million yuan (HK$232.28 billion) to increase its competitiveness in the rechargeable battery business.
The move comes after BYD had to delay launching its pure electric car model E6 in the United States as a result of a shortfall in battery production capacity.
The company selling its equity to BYD is called Zhabuye Lithium and is incorporated in Shigatse, Tibet. The miner's assets are worth 431 million yuan, BYD said in a filing to the Hong Kong stock exchange on Thursday.
The company's shares rose 10.7 per cent yesterday to HK$53.25 after it announced the deal.
Besides postponing its plan to launch its electric car in the US, BYD also has been unable to meet its goal to commercialise pure electric cars domestically.
BYD, which is 9.9 per cent owned by Warren Buffett's Berkshire Hathaway, is now providing about 50 units of the much-touted E6 in Shenzhen - where the company is based - as cabs, for demonstration purposes. A widescale rollout has been hindered by a lack of supporting infrastructure. The company is already well short of what it promised early this year - to provide 100 units of pure electric cars as cabs to the Shenzhen local government.