London black cabs raise $400 million to electrify taxi fleets

A London taxi cab passes Elizabeth Tower, home to Big Ben. Photo / Simon Dawson

Just days after London's new mayor revealed plans to clamp down on the city's toxic smog, the Chinese owner of the London Taxi Co raised $400 million for a project to electrify its fleet of iconic black cabs.

Zhejiang Geely Holding Group Co., owner of the company that makes London's iconic black cabs, secured $400 million through a green bond sale. The proceeds will finance the development of the TX5, a hybrid battery-powered version of the classic 1958 FX4, unveiled in October during a state visit to Britain by Chinese President Xi Jinping.

"This is a landmark for us, not only in the sense of the funds raised, but also the purpose," Frank Li, group chief financial officer said.

"We're going to do a clean taxi not only for the U.K. market, but it's going to be a global product that we can definitely grow our to help reduce emissions and provide a cleaner environment for everybody."

A growing number of investors are seeking to place money into green bonds that fund projects that promise to accelerate the shift away from polluting energy and transport fuels to renewable and clean technology.

Almost $56 billion of green bonds may be issued in 2016, topping last year's record of $46 billion, according to Bloomberg New Energy Finance.

Li said Geely's green bond may have been oversubscribed by eight times, though the company has no plans to issue another in the foreseeable future.

Geely is the first global auto company to offer a green bond, according to Barclays Plc, which was a joint coordinator of the issue with Industrial & Commercial Bank of China Ltd., Bank of America Merrill Lynch and Societe Generale SA. The bonds, maturing in 2021 have a 2.75 per cent coupon, the lowest ever for dollar bonds in China's auto industry, Barclays said.

In the next two weeks, Geely will move to a new factory in Coventry, England, where it will start work on producing a prototype of the TX5, said Li. Commercial sales are set to start in the fourth quarter of 2017. That's in time for the deadline of Jan 1, 2018, when London will require all new taxis to be zero-emission capable.

The factory will be able to produce 36,000 electric cabs a year, far exceeding the 23,000 cabs on the London's streets today. Li said the company is already in discussions with other European "mega cities" striving to curb pollution from their taxi fleets.