Alibaba-backed Xpeng Motors bags $500m in series C+ round

China’s smart electric vehicle company Xpeng Motors, also known as Xiaopeng Motors, has raised around US$500 million in a series C+ funding round from Hillhouse Capital, Sequoia Capital China, Aspex, and Coatue.

Xpeng P7 smart EV sports sedan / Photo credit: Xpeng Motors

Founded in 2015, Xpeng designs and manufactures EVs and aims to become the leading smart EV player in China. The Guangzhou-headquartered company has offices in Beijing, Shanghai, Silicon Valley, and San Diego.

According to the firm, the new capital injection will go toward its expenses on product development, manufacturing, sales, and service network, among others.

What challenges has it faced recently? The company said it experienced some supply chain issues in the first quarter of the year due to the Covid-19 pandemic. And with brick-and-mortar stores closed, Xpeng had to turn to online channels such as ByteDance’s TikTok, Twitter-like Weibo, and WeChat, among others, to reach its customers.

In general, car sales in China also slumped amid the pandemic. According to the China Association of Automobile Manufacturers, sales for new energy vehicles from January to May declined by nearly 40% year on year.

As China’s economy begins to recover, however, the market is starting to improve. The government is also aiming to make new energy vehicle sales account for a quarter of the country’s total car sales by 2025.

With that, the EV market in China remains highly competitive with players like Tencent-backed Nio, Didi Chuxing, and US-based Tesla gunning for a bigger slice of the pie.

In April, Nio secured US$1 billion from several state-run capital firms, while ride-hailing giant Didi raised US$500 million in a SoftBank-led round in its bid to launch autonomous fleet operations.

Foreign player Tesla, meanwhile, accounts for over 20% of the total market share, selling 11,095 vehicles in China in May.

How much traction has it gotten? As of March, Xpeng has more than 140 shops in 48 cities in China, the company told Tech in Asia.

In April, it launched its second smart EV model, the P7 sports sedan, deemed a rival to Tesla Model 3. It also secured the production license for its self-built, fully owned factory in Zhaoqing in Guangdong province in May.

What is its funding history?

• Series C round (2019): US$400 million from Xiaomi, China Merchants Bank, China CITIC Bank, and HSBC
• Series B+ round (2018): US$587 million from Primavera Capital Group, Morningside Venture Capital and chairman Xiaopeng He
• Series B round (2018): US$348 million from Alibaba, Foxconn, and IDG Capital
• Series A+ round (2017): Undisclosed amount from Alibaba, GGV Capital, Matrix Partners China, Shunwei Capital, Guangkong Zhongying Capital, Xin Ding Capital, Kinzon Capital, and Lightspeed Venture Partners
• Series A round (2017): US$320 million led by Chinese car rental company Car Inc.