Air conditioner manufacturer Gree announces plan to buy electric carmaker Yinlong

Chinese air conditioner giant Gree Electric plans to enter the mainland’s fast-growing electric car market through the purchase of carmaker Yinlong New Energy, Gree announced on Monday.

The Shenzhen-listed home appliance manufacturer said in a report filed to the Shenzhen Stock Exchange that it was preparing to purchase Yinlong and financial terms of the deal would be announced within 30 days.

Zhuhai-based Yinlong was valued at 5 billion yuan (HK$5.9 billion) when investment company Fangde New Energy Investment bought 1 per cent of its shares for 50 million yuan last month.

Yinlong has purchased a series of vehicle, battery and electric motor companies since 2010, according to its website.

The Yinlong purchase would mark the entry of another heavy-hitter into the expanding electric car business, in the footsteps of high-profile investors such as television giant Skyworth’s founder Huang Hongsheng and internet company LeEco.

“Gree is not late in the game at all,” said Liang Yonghuo, an analyst from China Merchant Securities (HK).

He said the market was still growing rapidly and there should be many more manufactures in order to build a stronger supply chain.

China surpassed the United States in electric car sales last year. The central government said nearly a quarter of a million purely battery-driven electric cars were sold on the mainland last year, more than double to US sales of around 110,000 reported by America’s Electric Drive Transportation Association.

Gree is one of the world’s leading home appliance manufacturers but has been suffering from slowing demand. Its revenue dropped 23 per cent year on year in the third quarter of last year.

“We have motors, models and the manufacturing technology and will be able to co-develop with Yinlong,” Gree chief executive Dong Mingzhu said in January. “I think Yinlong New Energy will be the next 100 billion yuan company of Zhuhai.”

Liang said government support in the forms of subsidies and infrastructure was the main driving force in the growth of the mainland’s electric car market.

Premier Li Keqiang called for further development of charging facilities for new energy cars in his annual government work report on Saturday.

Developing energy saving and new energy cars was also included in the latest five-year plan.

“The government support will continue,” Liang said, adding that improved infrastructure would see more people buying electric cars in the near future.