Chinese auto tech startup Ecarx to go public in US via $3.8 billion SPAC deal

Ecarx Holdings(亿咖通科技), an automotive tech firm co-founded by founder of Geely Holding Group Li Shufu, announced on May 26 it will go public in the United States through a merger with a blank-check company that values it at $3.8 billion, according to a report by Yicai Global on May 27.

Ecarx plans to debut on the Nasdaq in the fourth quarter of this year under the stock ticker [NASDAQ: ECX], the Hangzhou-based firm said, citing the agreement it signed with special purpose acquisition company Cova Acquisition. The deal is subject to approval by their shareholders and regulators.

According to the deal, which will give Ecarx’s shareholders about 89 percent of the combined company, the Chinese firm will secure $300 million in cash held in trust by Cova and $45 million in additional capital from strategic partners Geely, US automotive radar tech startup Luminar, and convertible note holder Lotus Technology, Yicai Global reported.

The proceeds will go to speed up tech development and new product roll-outs, support acquisitions or investments, and create further pathways for global growth through Ecarx's international operations office in London and a product development center in Goteborg, Sweden, the firm said.

Set up in 2017 by Li and Ziyu Shen, an expert in internet of vehicles tech, Ecarx develops hardware and software solutions essential for the development of connected, automated, and electrified mobility including infotainment head units, digital cockpits, vehicle chip-set solutions, a core operating system, and integrated software stack, according to its website.

Ecarx said it has benefited from its connection and privileged access to Geely and has growth potential within Geely’s ecosystem, which comprises Geely Automobile Holdings, as well as Lotus, Proton, Smart, Volvo Cars, and other original equipment manufacturers affiliated with Geely. Its products have been installed in 3.2 million cars worldwide, Yicai Global learned.

“We believe vehicle DNA will transform more in the next decade than it has in the past hundred years, and this shift will drive an extensive change in OEM vehicle development, calling for all-new platforms, advanced computing power and continuous over-the-air software updates,” Shen said. “Ecarx’s vertically integrated, full-stack automotive computing platform and underlying core technologies are designed to help meet this evolving demand head-on.”

Ecarx, which had operating revenue of $436 million last year, has completed three rounds of financing, in which Geely, Baidu, SIG Asia Investments, and China State-Owned Capital Venture Investment Fund invested, raising about $650 million.

Cova was registered in the Cayman Islands in December 2020 by Crescent Cove Advisors, a US institutional asset management and private debt firm. Crescent Cove was also an early investor in Luminar, according to Yicai Global.