Tesla foe in China Xpeng hits US$4 billion valuation before selling cars
Henry Xia jumps into the burnt toast-coloured electric car he helped build as co-founder of Xpeng Motors Technology and commands it to play Green Day’s “21 Guns”. He asks the car about traffic conditions and starts driving. The 35-year-old is the most senior car executive at a Chinese automaker that hasn’t delivered a single vehicle, doesn’t own a factory and hasn’t obtained a production license from the government. At least, not yet.
What the four-year-old startup has is backing from tech giants Alibaba Group Holding, Foxconn Technology Group and Xiaomi founder Lei Jun. Xpeng expects to raise more than US$600 million this month from investors that include Alibaba, valuing it close to US$4 billion, according to a person familiar with the fundraising.
In a test drive of Xpeng’s first crossover around a drab cement office park in Guangzhou, the roomy SUV drives smoothly, with a Tesla-like panoramic windshield and sleek exterior. But it’s the voice controls, streaming music, live video, driver-tracking maps and other software that reveal the auto ambitions of the company’s Chinese tech backers. Xpeng is making the equivalent of a smartphone with a steering wheel.
Xia explains why the company nicknamed this car David: “We’re going up against Goliath,” he says, referring to the hundreds of automakers churning out electric vehicles in China, where half of the world’s EVs are sold. “It’s not about the physical car any more, which anyone can now manufacture,” Xia says, “but about building a robot on wheels.”
Xpeng is primed to capitalise on a trade tussle that is already jacking up car prices. As China hits back against the US with retaliatory tariffs, import duties on American-made cars have increased to 40 per cent. But perhaps the bigger opportunity comes from Tesla’s still-diminutive presence in China, creating an opening for local start-ups to hawk cheaper, technology-centric electric vehicles.
Tesla reached a preliminary agreement last week with the Shanghai government to build China’s first car-production facility wholly owned by a foreign automaker. Tesla expects car production to start within two years of starting construction and to churn out 500,000 cars per year in China two to three years after that.
