Alibaba's latest bet shows transportation is the next battleground for China's tech giants

Key Points
  • Chinese tech giant Alibaba has bought a 10 percent stake in electric car start-up Xiaopeng Motors
  • Alibaba plans to launch "car vending machine" facilities to improve the customer experience
  • Other major tech players Baidu and Tencent have also made investments in the electric vehicle space
A vehicle by Xiaopeng Motors
Source: Xiaopeng Motors

e-commerce giant Alibaba has invested in an electric car start-up as the transportation sector emerges as the latest battleground for China's technology giants.

The Hangzhou-based technology company confirmed on Friday that it had invested in Chinese electric car start-up Guangzhou Xiaopeng Motors Technology, although it did not disclose the amount of that investment.

"As a clean energy vehicle start-up, the investment in Xiaopeng Motors fits with Alibaba's strategic focus in the automotive sector. Under our open-platform approach, we will continue to work with a range of automotive manufacturing partners to benefit Chinese consumers," an Alibaba spokeswoman said in an email.

Local newspaper China Daily reported that Alibaba would have an approximately 10 percent stake in Xiaopeng Motors following its investment.

The company's recent moves in the automobile space come after other major players comprising China's BAT companies — an acronym used to refer to Baidu, Alibaba and Tencent collectively — have made investments of their own in the electric vehicle space.

Tencent acquired a 5 percent stake in Tesla for $1.78 billion earlier this year. Both Tencent and Baidu have also invested in Chinese electric vehicle start-up Nio, while Baidu has backed WM Motor Technology, another electric vehicle start-up on the mainland, Reuters reported.

Xiaopeng Motors cooperated with Haima Automobile, a subsidiary of Chinese automaker FAW Group, to begin producing its first model this year, although a finalized version of the electric sports utility vehicle (SUV) is expected to hit the market only in 2018, state-run news agency Xinhua said.

The beta version of Xiaopeng's electric SUV has a mileage of 300 km and includes an autonomous parking feature, which enables the car to park itself without a driver.

Meanwhile, He Xiaopeng, the chairman of Xiaopeng Motors and an angel investor, said in a Weibo post on Friday that the start-up had completed its series A+ round of funding and was on track to begin series B financing early next year.

Car vending machines

Alibaba's move into the automobiles comes as the company attempts to diversify as part of its "new retail" policy, which involves merging both the online and offline. The company announced earlier this month that it would work with to explore ways the companies could upgrade customer experiences in the automobile industry.

An illustration of Alibaba's planned car vending machines — automated facilities which consumers can visit to test drive cars they want to buy.
Courtesy: Alibaba

Following that announcement, Alibaba presented one possible solution — vending machines which dispense cars.

Under that scheme, users will be able to browse car models on Alibaba's Tmall app before picking them up for a test drive at completely automated facilities, or car vending machines. Only users with scores above 700 on Sesame Credit, Alibaba's social credit scoring system, will be able to schedule test drives.

Alibaba intends to build "dozens" of those vending machines in China in the next year. The company said on its Alizila platform that it would be opening two such facilities in Shanghai and Nanjing in January next year.