China Evergrande New Energy Vehicle Group Ltd. is planning to raise around $347 million from a share placement in an effort to strengthen its financial position and fund production of electric vehicles.

The Hong Kong-listed company, also known as Evergrande Auto, is selling 900 million shares for three Hong Kong dollars apiece, equivalent to US$0.39 a share. That represents a nearly 15% discount to the stock’s last traded price, the company said late Friday.

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China Evergrande New Energy Vehicle Group Ltd. is planning to raise around $347 million from a share placement in an effort to strengthen its financial position and fund production of electric vehicles.

The Hong Kong-listed company, also known as Evergrande Auto, is selling 900 million shares for three Hong Kong dollars apiece, equivalent to US$0.39 a share. That represents a nearly 15% discount to the stock’s last traded price, the company said late Friday.

The latest transactions would involve its cash-strapped parent, property developer China Evergrande Group, selling some of its shares in the auto unit to a group of investors, then using some of the proceeds to buy newly issued shares in the business. Other proceeds of the share placement would be put toward production and research and development, the company said. After the transactions, the developer’s stake in Evergrande Auto would fall to 57.36% from 62.55% currently.

In September, Evergrande Auto had warned that it was facing a “serious shortage of funds” and that it may not be able to meet its financial obligations. It had said then that there hadn’t been material progress on restarting projects that had previously stalled because of payment delays.

It also scrapped a plan to raise funds by adding a second listing on the Shanghai Stock Exchange’s Science and Technology Innovation Board, or STAR Market.

Since then, the company has been in talks to get new investors, and last week said it raised $63 million in stock sales to fund its projects. including R&D.

Evergrande Auto was also severely affected by the financial troubles of its parent, which is a leading real-estate developer in China. Evergrande Auto’s market capitalization topped $80 billion in February—briefly giving it a higher valuation than that of many global auto makers—but it has since plunged below $5 billion.

Evergrande Auto, which has yet to make any money from selling cars, said the funds raised from the share placement will be used to pave the “groundwork for putting Hengchi new-energy vehicles into production.”

A few weeks ago, Evergrande founder Hui Ka Yan

said the developer plans to gradually shift its focus from real estate to producing electric vehicles. The Shenzhen-based developer owns more than 60% of Evergrande Auto, which ventured into electric vehicles in 2019 to capitalize on a world-wide boom in the industry.

Mr. Hui famously predicted that the business would one day rival Tesla Inc. It raised more than $3.3 billion early this year by selling roughly 10% of its shares to outside investors, and said its goal was to become “the world’s largest and most powerful new-energy-vehicle group.”

Write to P.R. Venkat at venkat.pr@wsj.com