(Yicai) April 16 -- Hozon Auto, the Chinese carmaker owner of electric vehicle brand Neta, has secured CNY5 billion (USD691 million) from state-owned capital firms based in the same cities where its factories are.

Hozon Auto signed investment agreements with Tongxiang State Owned Capital Investment and Operation, Yichun Jinhe Equity Investment, and Nanning Minsheng New Energy Industry Investment Partnership, the Tongxiang-based automaker announced on its official WeChat account yesterday.

The proceeds will be used to improve the company’s product research, development, and technological innovation, expand its research and development center, and enhance exports, Hozon Auto noted, adding that the three partners will also support its initial public offering efforts.

Hozon Auto has three plants in China, one in Tongxiang in Zhejiang province, one in Yichun in Jiangxi province, and one in Nanning in Guangxi Zhuang Autonomous Region. The company hopes to achieve centralized production at the Tongxiang plant to reduce production costs, Chief Executive Officer Zhang Yong told Yicai last month.

Hozon Auto is expected to double the annual production capacity of its Tongxiang plant to 200,000 cars by the end of the year and eventually reach 300,000 cars in the future. This will help the firm cut labor costs by 50 percent, Zhang noted, adding that the firm will diminish the production of loss-making products and introduce more high-end products.

Car sales at Hozon Auto plunged 16 percent to 127,496 units last year from the previous one because of intensified market competition, dropping its crown of China’s best-selling new energy vehicle startup to rank sixth. For this reason, Hozon Auto began to put more efforts on foreign markets.

Hozon Auto’s overseas sales skyrocketed 567 percent from 20,000 units in the period, with the figure expected to achieve 100,000 units in the next one to two years, Zhang said.

This was Hozon Auto’s second financing in less than one month. On March 20, Hozon Auto announced it had signed a deal with the Hong Kong government to become the special administrative region’s key corporate partner. On top of a USD200 million financing from Hong Kong, the firm also received a HKD200 (USD25.5 million) subsidy.

Editors: Dou Shicong, Futura Costaglione