BEIJING (Reuters) - Japan’s Itochu Corp has invested nearly $100 million in Chinese electric vehicle maker Singulato Motors to lift its stake to about 7% and plans to boost the holding if the startup meets certain conditions, two people familiar with the matter said.

FILE PHOTO: The logo of Itochu Corp is seen outside the company's headquarters in Tokyo, Japan, November 7, 2016. REUTERS/Toru Hanai/File Photo

The Japanese trading house, which owned around 1% of Singulato last year, could pump an additional “few hundreds of millions of dollars” into Singulato to become its No. 2 shareholder, one of the people said.

But that plan is dependent on Singulato speeding up development of its first model, a fully electric sport-utility vehicle called the iS6, and making proper preparations for an IPO, the person added.

The iS6 had been slated for a launch earlier this year but has faced some delays, the source said without elaborating.

The investment is a shot in the arm for Singulato. While it is valued at $3.5 billion according to China’s science ministry and is one of the more high-profile EV startups in the world’s biggest auto market, Singulato is like many of its peers facing a much tougher funding environment.

Not only have investors been put off by setbacks to profitability for Tesla Inc as well as sliding sales at fellow Chinese EV startup Nio Inc, the sector is also grappling with government cuts to subsidies and plans to phase subsidies out altogether.

Sales of so-called new energy vehicles in China, which includes electric vehicles, contracted for a second straight month in August, due to the cuts to subsidies.

A Tokyo-based Itochu spokesman said the trading house had recently made an additional investment in Singulato, but declined to specify the amount except to say it was a minor investment.

Asked if Itochu has conditionally agreed to further hike its investment, he said there were no such plans and declined to comment further.

Singulato’s biggest shareholder is Shen Haiyin, its co-founder and chief executive, with a stake of about 29%. Its current No. 2 shareholder with 16% is a company that holds shares for Singulato employees.

Itochu said this year it had formed a partnership with New York-based ridesharing company Via Transportation Inc.

The two people familiar with the matter said Itochu and Singulato might cooperate in China to offer mobility services which may include Via.

The deal with Itochu follows an agreement in April for Singulato to purchase electric car technology from Toyota Motor Corp - one that allows Singulato to accelerate development of a planned mini EV, a second vehicle for the startup.