Chinese e-commerce giant Alibaba and Taiwan-based contract manufacturer Foxconn Technology have led a 2.2 billion yuan ($347.74 million) funding round in Xiaopeng Motors, an electric car start-up dubbed China's Tesla. Henry Xia, who founded the startup in 2014, admitted openly that he was influenced by Tesla and by the US automaker’s announcement that they were open-sourcing their patents. Xiaopeng's designs are similar to Tesla in terms of how advanced they are and how sleek they look.
Xiaopeng, also known as Xpeng, debuted its first production model at CES technology show in Las Vega earlier this month. The ‘G3’, will hit the market this year and is expected to be priced between 250,000 yuan and 300,000 yuan (US$47,440) South China Morning Post reported.The Tesla Model X SUV sells for more than $100,000.
” XPENG Motors combines the advantages of the internet, artificial intelligence and traditional manufacturing,” Joe Tsai co-founder and vice-chairman of Alibaba, which owns the South China Morning Post commented on the announcement at a press conference in Hong Kong. “Alibaba is very excited to work together with XPENG Motors to accelerate the integration and innovation across sectors, leading to more-rapid development in smart transportation.”
The startup completed Series-A fundraising round in December, with Alibaba, GGV Capital and Matric Partners China among the investors. The latest funding puts the total investment in Xiaopeng at 5 billion yuan. Other investors also include Venture capital firm IDG Capital, GGV Capital, Morningside Venture Capital and Matrix Partners. Russian billionaire investor Yuri Milner is also supporting the initiative, Alibaba said in a statement. Xpeng will use the proceeds to expand production at a factory in Zhengzhou.
China’s tech giants are now quite interested in new energy vehicles (NEVs) companies as the country's new energy vehicle sales are expected to grow by 40 percent in 2018, according to an industry body. Alibaba is betting connected cars will generate new revenue and has invested heavily in smart car technology. The Hangzhou-based group has also partnered with a handful of traditional western and Chinese carmakers, including Ford and BMW.
Other major tech players Baidu and Tencent have also made investments in NEVs. Baidu have led fundings of at least $2.5 billion into Chinese electric-car companies including NiO and WM Motor Technology. Tencent also invested $1.8 billion for a 5% stake in Tesla Inc.
The pace of competition among start-ups in the world’s largest auto market is escalating as Beijing has identified alternative-energy vehicles as a strategic industry and plans to boost annual sales of electric cars and plug-in hybrids 10-fold in the next decade. Electric vehicles (EVs), both fully electric and hybrids, are part of a new industrial policy known as Made in China 2025, by which year Beijing wants to have national champions in 10 high-tech industries, including robotics, semiconductors and electric vehicles.
The stock of new energy vehicles in China is the world's largest, with cumulative sales of more than 1.7 million units through December 2017. These figures include passenger cars and heavy-duty commercial vehicles such buses and sanitation trucks, and only accounts for vehicles manufactured in the country.