Alibaba-backed Chinese electric vehicle start-up Xpeng raises $400m – Financial Times

Chinese electric vehicle maker Xpeng Motors, backed by Alibaba and Foxconn, has raised $400m from investors, defying a sales slump in the world’s biggest market for clean energy vehicles.

The Guangzhou-based company said Chinese smartphone maker Xiaomi participated in its Series C funding round, which comes as Xpeng prepares to launch its second model, the P7 sedan, early next year. He Xiaopeng, chairman and chief executive of Xpeng, also participated in the round.

The start-up did not disclose its post-money valuation but a person with knowledge of the matter put it at just under $4bn.

Wednesday’s announcement comes on the heels of data showing sales of electric and hybrid vehicles in China almost halved in October, falling for a fourth straight month. The slowdown has resulted in a tough financing environment for China’s crowded electric vehicle market.

Still, Xpeng said it had been able to reach most of its business and finance targets despite the difficult circumstances.

“We have demonstrated to our shareholders our ability to sustain our business in the face of these challenging conditions,” said Brian Gu, Xpeng vice-chairman and president.

Scores of electric car start-ups have been launched over the past few years in China, fuelled by government subsidies and cheap financing. Beijing has made boosting ownership of clean energy cars a key part of its efforts to eventually ban petrol and diesel vehicles.

But the withdrawal of subsidies in June and an economic slowdown that has hit the country’s broader automobile market has curbed enthusiasm for the more expensive new energy vehicles.

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Chinese EV start-up WM Motor, which is in the process of raising a $1bn Series D round, said the key players in the sector were nevertheless still able to attract financing.

“Sales volumes have clearly been impacted this year by a number of market-related factors but the electric vehicle story in China remains intact,” said Rupert Mitchell, chief strategy officer of WM Motor. “Investors in leading players in the sector remain excited about the opportunity.”

Xpeng, WM and Nio are the Chinese start-ups that have raised the most money to date. But spiralling losses and a series of disastrous mis-steps by Nio have been a cautionary tale for the industry.

The drop in sales has been due largely to rental and car-sharing companies having front-run purchases before the subsidies were cut, according to Yale Zhang, managing director at consultancy Automotive Foresight in Shenzhen.

“The future is still bright in the medium to long term, which is why a start-up like Xpeng can get investment from companies like Xiaomi,” Mr Zhang said, adding that a number of quality electric cars would be coming to market in the final months of 2019 and next year.

“Individual consumers are still interested in EVs and this will start to become clear as battery prices come down further.”


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