Kaixin Auto has signed a non-binding letter of intent to acquire 100 percent of WM Motor from its shareholders by issuing a certain number of new shares.

(Image credit: CnEVPost)

US-listed Chinese used-car dealer Kaixin Auto Holdings (NASDAQ: KXIN) plans to buy electric vehicle (EV) startup WM Motor as the latter continues to struggle with financial woes.

Kaixin Auto announced last night that it has signed a non-binding letter of intent with WM Motor to acquire 100 percent of its shares by issuing a certain number of new shares.

Kaixin Auto's brief announcement provided no further details on the acquisition, but emphasized the value of WM Motor's assets.

WM Motor was founded in late 2015 and has already delivered four models in volume: the E5, EX5, EX6, W6, and is about to deliver the M7, Kaixin Auto's announcement reads.

WM Motor has delivered more than 100,000 smart pure-electric passenger cars in about 200 cities in China, with top product quality and user experience, the announcement claimed.

With two manufacturing bases built on Industry 4.0 standards in Wenzhou, Zhejiang province and Huanggang, Hubei province, the EV maker is the first and for a long time a rare company among the new Chinese car-making forces to have both manufacturing bases and two new energy vehicle production qualifications, Kaixin Auto emphasized.

WM Motor has made significant breakthroughs in its overseas expansion in 2023, having specifically promoted diversified cooperation programs in the European Union, the Middle East, ASEAN, and North America, Kaixin Auto said.

WM Motor's brand and product positioning of fashionable technology fits well with Kaixin Auto's growth plans, said Lin Mingjun, Kaixin's chairman and CEO, adding that the acquisition will give WM Motor a larger capital stage.

WM Motor submitted its listing application to the Hong Kong Stock Exchange on June 1, 2022, but nothing has happened since then.

The company was planning a backdoor listing in late 2022 through a reverse takeover of Apollo Future Mobility Group (HKG:0860), which is already listed in Hong Kong.

WM Motor had a 28.51 percent stake in Apollo at the time, and its founder, chairman, and CEO Freeman Shen serves as co-chairman of the board and a non-executive director at the latter.

The plan has failed, however, with both Apollo and WM Motor announcing that they are abandoning the initiative.

On September 8, Apollo said in a Hong Kong Stock Exchange announcement that the parties had agreed to terminate the agreement to acquire WM Motor, and therefore the acquisition would not proceed.

The reasons for the termination included volatile global market conditions, continued uncertainty in the financial market climate and short-term economic recovery, Apollo said.

In a brief statement posted on Weibo on September 10, WM Motor said that after careful consideration, it has voluntarily terminated the reverse takeover process with Apollo on the Hong Kong Stock Exchange.

WM Motor remains a significant shareholder in Apollo and will continue to support Apollo's development in the future, the EV company said.

WM Motor was one of the earliest EV startups in China and has seen sales continue to rise following steady deliveries of several models, and was one of the top-selling new car-making forces in China in 2019.

Last year the company began to experience financial difficulties and the crisis has not been lifted until now.

WM Motor eyes overseas markets as it struggles at home