In a timely move, Zhejiang Geely Holding Group, the owner of London Taxi Co., has raised US$400 million for the “electrification” of its iconic black cabs, just days after the newly minted mayor of London, Sadiq Khan, announced plans to clamp down on the smog that plagues the city.
Geely, which bought the group out in 2013, obtained the funds through a green bond sale, and the money will go towards developing a hybrid battery-powered version of the classic 1958 Fx4, called the TX5.
Investors are increasingly turning to green bonds – which fund projects that facilitate the adoption of renewable and clean technologies – to safeguard their money. Last year, a record US$46 billion of green bonds were issued, and this year, it is expected to reach another record-breaking total of US$56 billion.
Geely’s green bond was oversubscribed by almost 6 times; the five-year bond pays a 2.75% coupon. 90% of the bonds were taken by Asian investors and it has been the Chinese groups that are taking the lead in global green bond issuance, in large part due to government efforts. Chinese policymakers are building towards a “green finance” system (the green bonds playing a major role in it) which is one of the goals of China’s 13th Five-Year Plan, which ends in 2020.
Production of the environmentally friendlier cabs will commence in the fourth quarter of next year, just before the stricter taxi emissions limits in London takes effect on 1 January 2018, when an ultra-low emissions zone will be introduced.
In a few weeks, work to develop the TX5 prototype will start in a new factory in Coventry. The new facility has a 36,000 electric cabs per year capacity, more than the 23,000 cabs plying London streets today. If you’re wondering why build a factory with such high production capacity, the company is already speaking with other cities in Europe, in hopes of supplying electric cabs to them too. We smell green, in more ways than one.
