The Qingdao City Construction Investment Group Limited  (QCCIG) has entered into framework strategic cooperation agreement with Sun Seven Stars Investment Group Limited (SSSIG) to raise up to RMB 50 Billion (USD 7 Billion) fund to finance investment projects in Qingdao and Shandong Province. The required funds are provisionally committed by insurance companies, subject to a two- to three-month administrative process, and is part of a fundraising initiative which has been underway since Q4 of 2019.

Approximately 20% of the new fund will be earmarked to finance the purchase of electric vehicles (EVs) to replace existing gas-powered fleets in Shandong province. The fund will sign an agreement with Ideanomics’ MEG Group once it is fully formed and the funds are in place to provide MEG financing for EVs. MEG, based on its S2F2C (Sales to Financing to Charging) model will be the beneficiary of these funds through EV sales, leasing and financing services, and charging-related energy sales.

QCCIG is the premier investment arm of the city of Qingdao. Qingdao, based on GDP, is the largest city in Shandong Province with a GDP of RMB 1.2 Trillion(USD 170 Billion) as of December 2018, equivalent to countries such as Greece, New Zealand, and Qatar. The agreement is a three-year collaboration between QCCIG and SSSIG, and is designed to strengthen the relationship between industry, innovation, and capital, to help elevate the overall economic development of Qingdao.

Under the terms of the agreement, QCCIG will provide financial support for the establishment of the funds, in addition to various policy and project resources. SSSIG will provide industry expertise in investments and capital markets to raise funds for various projects and commercial initiatives in Qingdao. SSSIG, which is Ideanomics largest shareholder, will raise up to RMB 50 Billion (approx. USD 7 billion) for QCCIG  from financial partners including, but not limited to, insurance companies (China Life, PICC, China Ping An, China Pacific, Pacific Insurance, New China Life Insurance, Taikang Insurance (Asset Management), etc. ), as well as other central enterprises and institutions. QCCIG’s AAA-rated investment will guarantee the principle of the investment by the insurance companies and other institutions.

MEG’s 5-Level Business Model Matrix for China is comprised of 1) Fleet Financing Fund Alliance 2) Umbrella Sales Alliance 3) Battery & Manufacturers Alliance 4) Operating Partners Alliance and 5) Energy Sales Alliance. This strategic cooperation agreement is the first in a series of several fundraising agreements for Level 1 – Fleet Financing Alliance, which is designed to solve the fleet financing hurdles.  These funds may be used to help fleet operators receive the necessary financing and loans to replace fleets of hundreds and thousands of gas-powered vehicles with EVs. Over the course of the year, SSSIG’s goal is to sign between three and six similar deals with 20% to 30% of the funds being allocated to MEG for fleet financing. The timing of closing these future deals may vary due to current travel restrictions.

“The additional funds to support fleet operator sales of commercial electric vehicles in Qingdao solves one of the largest hurdles to commercial EV conversion, large-scale EV purchases,” said Ideanomics CEO Alf Poor. “Innovative financing programs are a key component in enabling these EV sales, and the funds may further extend our ability to finance purchases that would otherwise not be possible for commercial fleet operators. The ability to secure competitive financing enables a faster transition over to EV, which in turn unlocks further substantial savings in both fuel and maintenance costs, as well as eliminating the fossil fuel emissions which are damaging to the environment.”

The fund formed by SSSIG and QCCI to replace EV fleets in Qingdao and Shandong Province are separate from the activities of the upcoming Mobile Energy Group Center in Qingdao. The Mobile Energy Group Center falls under MEG’s Business Division #2, Qingdao Vehicle Sales Center & National Network. While both include EVs sales, the new fund managed by SSSIG and backed by QCCI will source vehicles through direct channels, rather than through the Mobile Energy Group Center.