Xpeng Motors Plans to Raise $2.7 Billion This Year to Take on Tesla in China
Alibaba and Foxconn-backed Xiaopeng Motors (Xpeng Motors) plans to raise 17 billion yuan ($2.7 billion) in funds this year as the Chinese car startup seeks to take on rivals in China—the world's biggest market for electric vehicles.
The company plans to start pre-sales of its first model, the G3 crossover, by the end of this month, founder He Xiaopeng said in an interview at the Boao Forum in China. He did not elaborate on Xiaopeng's specific fundraising plans. Xpeng showed off its new G3 SUV at this year's CES in Las Vegas.
Xpeng Motors is among numerous electric vehicle startups working to become China's answer to Tesla and are reshaping the auto industry as the Asian country promotes new-energy vehicles (NEVs) in an effort to clean up excessive air pollution in China and cut its reliance on imported oil.
Already the biggest EV market, China accounted for more than half of worldwide EV sales last year. Sales of all vehicles grew at a monthly pace of more than 20 percent in 2016 and 2017, according to data from the China Passenger Car Association.
The investment in Xpeng by Alibaba's is the company's latest move in the automotive industry, as the Internet giant bets connected cars will generate new revenue opportunities. The Hangzhou-based group has also developed its own vehicle operating system.
In January, Alibaba and Foxconn led a round of fundraising by Xpeng, investing 2.2 billion yuan. At the time, that put the total investments at 5 billion yuan, according to Xiaopeng.
Xpeng's He said the company will collaborate with Alibaba for maps and cloud products in a non-exclusive alliance, adding the company's focus is on ensuring quality of production ramp-up.
Xpeng supports China's plan to allow foreign automakers greater ownership in joint ventures as this will spur real competition and ensure the quality of cars made in China, He said.
The Xpeng Motors G3
Tesla's Model X SUV has become extremely popular in China. The California-based company's China sales reached $2 billion in 2017 and Tesla has expressed interest in building a factory there to build its electric vehicles. However, under Chinese law, such a project would require Tesla to find a Chinese joint-venture partner, something the company has been reluctant to do, even though its sales have been on the upswing.
Xpeng Motors was co-founded by He and his partner Henry Xia, in 2014. It was then just one of several dozen Chinese electric car start-ups to have emerged after Beijing launched preferential policies to encourage cleaner electric vehicles.
Other investors in Xpeng Motors include GGV Capital, Morningside Venture Capital and IDG. Xpeng Motors is also securing top talent as well.
Brian Gu, chairman of Asia-Pacific investment banking at JP Morgan Chase joined Xpeng as its vice-chairman and president just over a month ago.
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