This article by Chris Udemans originally appeared on TechNode, the leading English authority on technology in China.
Xpeng Motors has brought onboard smartphone maker Xiaomi as a strategic investor, as the Alibaba-backed new energy vehicle (NEV) startup announced $400 million in Series C funding.
Why it matters: Xpeng’s hefty haul comes against a macro-industrial backdrop of falling sales after subsidies for electric vehicles were cut over the summer, creating an increasingly difficult funding environment for NEV startups.
- Major players including Nio are struggling to get close to sales targets as NEV deliveries stalled in the second half of the year.
- Sales fell sequentially for three consecutive months beginning in July, while year-on-year rates of decline deepened from 4.7% in July to 34.2% in September.
“The business definitely needs capital to grow. It is a business that is still very much in the ramping up stage and we have to invest in research and development, in building our sales and services network, and completing our manufacturing plant, which we aim to have built by the end of this year. We have been working closely with Xiaomi on smart devices and they have the IoT leadership in China, and even globally, and smart auto could be a very good extension of the ecosystem.”
—Xpeng President Brian Gu, speaking to TechNode at TechCrunch Shenzhen on Tuesday
Details: Xiaomi is among a group of strategic and institutional investors to take part in the funding round. Xpeng also secured several billions of RMB-denominated unsecured credit lines from Chinese and commercial lenders including China Merchants Bank, China CITIC Bank, and HSBC.
- Company Chairman He Xiaopeng again invested some of his own funds in this latest round.
- Xpeng previously raised RMB 4 billion ($587 million) in Series B+ funding in August 2018, led Primavera Capital and Morningside Venture Capital, along with Chairman He.
- The Guangzhou-based NEV maker set out plans in June to raise new funding by the year-end.
- Xpeng Motors started delivering the 2020 version of its first mass-market SUV model, the G3, in September. The car features an NEDC range of 520 kilometers.
- Last month, the firm announced plans to expand its infrastructure through a partnership with TELD, the operator of China’s largest charging network.
Context: China’s total NEV deliveries are expected to remain flat this year compared with 2018, according to a report from China International Capital Corp.
- CICC attributed the prolonged slump to consumer unwillingness to buy NEVs. Many have been put off by a spate of vehicle fires that took place over the summer.
- Xpeng plans to launch its second vehicle, the P7 sedan, next year, and begin deliveries in the second quarter.