Xpeng Motors, the Chinese EV (electric vehicle) manufacturer, has reportedly raised $500 million in fresh funding. The funding was led by Sequoia Capital China, Coatue, Hillhouse Capital, Aspex, and other investors, due to the rising competition in the new energy vehicle market in China.
The recent funding happened in line with its $400 million cash injection from various investors in November, including Chinese smartphone manufacturer, Xiaomi.
The EV sector in China has been considerably impacted by the coronavirus pandemic. According to the China Association of Automobile Manufacturers’ data, the new EV sales have been declined by 33.1% Y-o-Y in June. However, the sales have recently been increasing M-o-M as the economy displays signs of rebounding.
In 2020, the Chinese government had announced various policies to facilitate the growth of the electric car market. As per the statement made by the government, the energy vehicle tax break policies and subsidies, which were expected to expire in 2020, have been extended till 2022. A $385.7 million (¥2.7 billion) investment was also received to enhance the charging infrastructure in China.
Favorable policies imposed by the Chinese government for the electric car market have driven the sales of several domestic brands as well as fuel the intense competition.
For the record, Xpeng Motor has started selling its new P7 sedan, a competitor to Model 3 of Tesla, from July 2020. Model 3, which was manufactured in the Shanghai factory, has been rolled out by Tesla for Chinese customers in January. In addition to Xpeng, other EV manufacturers in the region are focusing on raising funds. For instance, NIO, which is listed in the U.S., had secured credit lines worth $1.4 billion (¥10.4 billion) in July.
The COVID-19 outbreak has adversely impacted a few EV firms in China. For example, Byton, a startup, has recently announced its plan to suspend business operations for 6 months and furlough employees as the cost-cutting strategy.