Six years ago, Chinese auto-parts supplier Wanxiang Group purchased assets of Fisker Automotive for $149.2 million in a bankruptcy auction. Nine months later the name of the company changed to Karma Automotive.
And fast forward November 2020, Karma Automotive and Wanxiang Group are filling the headlines, again.
Just a week ago, it was reported that Karma sued Lordstown Motors of ‘Corporate Espionage’ saying how the company “brazenly stole” its trade secrets. But owners of Wanxiang Group are not sitting tight, they have companies to acquire.
Next company on their list is AYRO, a manufacturer of light-duty, urban, and short-haul EVs. They today announced how they entered into definitive agreements with Carnegie Hudson Resources, an investment arm of Wanxiang America, and several existing institutional investors.
The gross proceeds to AYRO from this offering are expected to be approximately $10.0 million, before deducting placement agent fees and other offering expenses. The Company intends to use the net proceeds from this offering for manufacturing, production, operations, product portfolio market expansion, and general working capital.
Karma Automotive, part of Wanxiang Group, had recently announced its electrified platform (something similar to what Canoo is doing) called E-Flex and its first BEV model. A report by Jalopnik, based on statements by an insider in the company, sheds some light on the background to the announcements: According to Jalopnik, the technical specifications in the announcements are “invented” and the E-Flex platforms are mere “film props”, only one of which is actually drivable.
So, is AYRO deal with Wanxiang Group a bad karma for a long term stock holders or a great move? No one knows , but AYRO is up 20% today.