China Amps Tesla Competition As New EV Startup Raises $400M In Capital

Chinese electric vehicle (EV) startup Xpeng Motors has secured $400 million in fresh capital from a group of unidentified investors.

The Series C announced Tuesday brings together private equity firms, corporate, and individual investors, with smartphone maker Xiaomi joining in as a new strategic investor. Chairman and CEO of Xpeng Motors He Xiaopeng also participated in the funding round.

“The signing of the new fundraising, which not only attracted new strategic investors such as Xiaomi Corporation but also received strong support from many of our current shareholders, is a renewed endorsement of our long-term strategy, execution capability and prudent business model,” said Mr. He.

The collaboration of the two companies merges the technologies of developing smartphones and smart cars and further advances innovation of smart hardware, according to Xiaomi CEO Lei Jun.

“We are a strong believer that smart mobility and autonomous driving are going to transform our daily lives, and we share the same vision with Xiaomi that technology innovation is the key driver in reshaping our future transportation," said Mr. He.

"Xiaomi’s experience and insight in consumer behavior, technology knowhow and market trends can add tremendous value to what Xpeng Motors is set to achieve."

Aside from the almost half a billion financing, Xpeng also received unsecured lines of credit from local and international banks such as China Merchants Bank, China CITIC Bank, and HSBC. These yuan-denominated credit lines amount to billions of Chinese currency.

Founded in 2014, Xpeng has some big-name backers which include e-commerce giant Alibaba, Taiwanese electronics manufacturer Foxconn, and venture firm IDG capital. The company competes with Tesla in the EV market.

Xpeng is set to launch its P7 sedan, a model that they unveiled in April, by next year during springtime and plans to start delivering vehicles by the second quarter. They also released an improved version of the G3 smart SUV, G3 2020, with a 520 km NEDC driving range. The G3 also scored the highest among EVs in China's safety test C-NAP.

Its competitor Tesla, on the other hand, is planning to open a new "Gigafactory" near Berlin to assemble the Model 3 electric sedans and Model Y, a crossover utility vehicle (CUV).