On Wednesday, Alibaba Group Holding Ltd backed Chinese electric vehicle (EV) manufacturer Xpeng stated it has raised $400 million from investors including Xiaomi Corp, to fund its growth.
The fundraising comes at a time when industry watchers as well as bankers describe as an increasingly tough financing environment for Chinese EV startups who are jostling for funding in an increasingly crowded sector. Incidentally the Chinese government has cut subsidies for EV and plans to phase them out completely.
Incidentally, Xpeng did not comment on its valuation.
Sources however say, its latest fundraising valued the five-year-old startup at around $4 billion.
“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,” said XPeng’s chief executive He Xiaopeng in a statement.
According to an anonymous source familiar with the matter at hand, Xpeng will use the proceeds for research and development of autonomous driving-related software, mass production of its G3 sport-utility vehicle model and P7 sedan, branding and expanding its retail network.
The source preferred the cover of anonymity since the matter was private.
In a statement XPeng said, it has secured “several billions” of yuan-dominated unsecured credit lines from banks including China CITIC Bank, China Merchants Bank, and HSBC, without specifying figures.
XPeng, which sold nearly 13,000 vehicles in the first nine months of 2019, also counts IDG Capital and Hillhouse Capital Group among its backers.