Ideanomics updates on subsidiary's EV activities in China amid coronavirus fears

Ideanomics Inc (NASDAQ:IDEX) updated investors Tuesday on Mobile Energy Global (MEG), the company’s electric vehicle corporation, in light of the coronavirus. Companies in China broadly returned to work at the beginning of March, the company said. MEG’s partners have been impacted to varying degrees, although the company has no details of any government stimulus programs to help the Chinese economy recover. Financing/Funding for Fleet Purchasing Back in September 2018, Ideanomics announced an agreement with First Auto Loan regarding lease financing and asset-backed security products. The goal is to raise $6 million to fund the lease financing of ride-share vehicles and other types of app-requested taxis. READ: Ideanomics' MEG subsidiary to unveil 100,000-square-meter flagship sales facility in China Then, in November and December 2019, Ideanomics and MEG announced the creation of multiple funds in association with Dasheng Licheng Lease Financing, bringing in insurance companies to provide large-scale funds supporting EV lease financing programs. The final province-level registrations were underway when the outbreak occurred and are now back underway, the company said. EV and EV Battery Manufacturing Alliance Over the past 18 months, Ideanomics and MEG have partnered with EV and EV Battery manufacturers, including JAC, Geely, Beijing Foton, CATL and Yinlong, among others. Ideanomics announced plans last week to open a flagship sales center in the Chinese city of Qingdao, where the company plans to showcase many of said partners. The company had planned to participate in an EV mining event held from March 18-20 in Stockholm, but that event has been rescheduled to November due to coronavirus concerns. Joint Ventures and Other Strategic and Umbrella Agreements Ideanomics and MEG have a variety of agreements in place, including deals with the provinces of Inner Mongolia and Yunnan to help support the transition to EV mining. In December, MEG signed a strategic partnership with Linghao Zhitong 3000, China's largest commercial truck service to extend MEG services to commercial truck customers. Each of these is progressing in the normal course of business, the company said. Sales Agreements for Execution In August, Ideanomics and MEG announced a joint venture with Chinese ride-hailing company iUnicorn, to procure and finance 90,000 taxis for the city of Chengdu and other cities. Two months later, MEG announced the delivery of an additional 4,127 taxis, with 11,000 more delivered by the end of 2019.  Those taxis still require final rebate and registration approvals from the local government, which can occur when spring temperatures reduce the impact of the outbreak and cities return to normal levels of commerce and the resulting demand for public transportation is restored to pre-outbreak levels, the company said.  In November, Ideanomics and MEG announced an order from Yunnan province for 35,000 taxis, and an additional order for 2,300 taxis from the city of Guillin, in Guangxi province. Global EV Sales Expansion In March 2019, Ideanomics acquired a 51% stake in Treeletrik, a Malaysia-based EV manufacturer and distributor. Since the acquisition, Treeletrik brought in an experienced CEO, increased its sales, upgraded the land secured under the acquisition, secured orders elsewhere in the region and is in negotiations to bring in a number of Chinese EV manufacturing and EV battery partners. Elsewhere, MEG has received some preliminary order inquiries in the Middle East and plans to broadly expand its global footprint once all of its China-based activities are underway, the company said. Energy Sales MEG’s core strategy is to acquire fleet customers by offering an innovative and cost-efficient transition to EV, the company said. To that end, MEG has signed joint venture and strategic partnership agreements and plans to sell both pre-paid electricity at a discount to fleet operators, as well as participate in the EV charging market. In July, Ideanomics announced agreements with Three Gorges, to include Tianda Energy and Ding Fang, and Palcan Energy to finance and develop EV fast charging networks. Then, in September, Ideanomics and MEG announced a joint venture with PetroChina to transform gas stations into EV fast charging stations, starting in the city of Nanjing. Other Financial Services/ABS In August 2018, Ideanomics announced an agreement with NTC Electric City Bus to provide ABS refinancing for buses in several China cities, including Tianjin.  The city’s debt rating at the municipal level, along with delivery delays, has made underwriting and issuance of ABS a bigger challenge, the company said. In June, Ideanomics signed an agreement with EV bus and battery manufacturer Yinlong covering activities within and outside of China. Because Yinlong had already delivered 5.1 billion RMB worth of manufacturer-financed EV buses in Tianjin separate from that agreement, the company began discussions in the late third quarter with Yinlong to reorganize the registration and recording of those delivered assets to make them compliant with ABS requirements.  That activity is underway, although it was disrupted by the coronavirus, the company said. MEG plans to work closely with Yinlong in 2020 to help support the delivery of additional city bus orders in order to facilitate the ABS refinancing accordingly. In June, Ideanomics and MEG announced a joint venture with the energy company GCL, which includes GCL contributing guaranteed sales orders of 500,000 logistical vehicles over the next three years.  These orders will require financing, as the original barter-plus-subsidy deal put in place is not being accepted by manufacturers, the company said. Several of the small -o-midsize orders from the GCL order flow are currently in the pipeline to help develop and streamline the deal-expediting process of its lease financing activities. Ideanomics is focused on facilitating the adoption of commercial electric vehicles and developing financial services and fintech products. Its electric vehicle division, Mobile Energy Global (MEG), provides group purchasing discounts on commercial electric vehicles, EV batteries, as well as financing and charging solutions. Contact Andrew Kessel at andrew.kessel@proactiveinvestors.com  Follow him on Twitter @andrew_kessel