Alibaba-Backed Carmaker Aims to Raise More Than $1.6 Billion

(Bloomberg) -- Xiaopeng Motors, the Chinese car startup that’s backed by Alibaba Group Holding Ltd. and Foxconn Technology Group, plans to raise more than 10 billion yuan ($1.6 billion) this year in a bid to take on rivals in 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 didn’t elaborate on the fundraising plans.

Xiaopeng is among startups striving to become China’s Tesla Inc. and reshape the auto industry as the Asian country promotes new-energy vehicles in an effort to clean up the environment and cut its reliance on oil imports. Already the biggest EV market, China accounted for more than half of worldwide sales last year. Sales of all vehicles grew at a monthly clip of more than 20 percent in 2016 and 2017, according to data from the China Passenger Car Association.

Alibaba and Foxconn led a round of fundraising by Xiaopeng, investing 2.2 billion yuan, the carmaker said in January. That put the total investment as of end-January at 5 billion yuan, according to the company.

The investment marked Alibaba’s latest move in the automotive industry, as the Internet giant bets connected cars will generate new revenue. The Hangzhou-based group has developed its own car operating system.

NIO, another Chinese electric-car startup, was raising more than $1 billion in a new round of financing from investors led by Tencent Holdings Ltd., according to people with direct knowledge of the matter in November. Companies investing in that round included Baillie Gifford & Co., the second-biggest institutional investor in Tesla, Lone Pine Capital, Citic Capital Holdings Ltd. and China Asset Management Co., one person said.

Xiaopeng’s He said the company will collaborate with Alibaba in maps and cloud products in a non-exclusive alliance, adding the company’s focus is on ensuring quality of production ramp-up. Capacity will reach “tens of thousands” of units next year, he said, without giving current figures.

Xiaopeng 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.

Separately, Chinese President Xi Jinping reiterated Tuesday that the nation will lower restrictions on foreign ownership in the auto sector, and measures should be implemented as soon as possible. China will also reduce import tariffs on vehicles, Xi said in a speech at the Boao Forum.

To contact Bloomberg News staff for this story: Rachel Chang in Boao, China at wchang98@bloomberg.net, Prudence Ho in Hong Kong at pho83@bloomberg.net.

©2018 Bloomberg L.P.

With assistance from Rachel Chang, Prudence Ho