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Tech giants hike auto holdings

By He Wei in Shanghai and Ma Si in Beijing | China Daily | Updated: 2017-12-14 08:09
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China's technology titans are waging war on yet another front: automobiles.

An investment subsidiary of Alibaba Group Holding Ltd has acquired a holding of around 10 percent in Xiaopeng Motors, a Guangzhou-based new energy car startup, marking the latest entry into a crowded field that could become a $42 billion industry.

The parent of Xiaopeng has completed the transaction with Alibaba, according to Qichacha, a data bank that tracks business registration information in China, with no amount disclosed.

Founded three years ago, Xiaopeng is chaired by former Alibaba executive and UCWeb founder He Xiaopeng, with additional investment coming from luminaries in the tech domain and venture capital firms.

To build internet-connected cars, Xiaopeng has recruited core employees from major automakers like Guangzhou Automobile Group Co Ltd, BYD Co Ltd and Ford Motor Co, as well as from tech companies such as Samsung and Huawei, according to the company website.

Xiaopeng claimed that its first batch of prototype electric SUVs will feature intelligent driving, self-parking, and mobile phone-enabled remote control functions.

The move came amid a string of deals signed between the tech giant and automakers, as evidenced by its recent partnership with Ford to co-develop smart vehicles.

That would pit it squarely against Tencent Holdings Ltd and Baidu Inc, both of which have invested billions of dollars in artificial intelligence, driving research and grooming EV startups including Nio and Weltmeister.

Even smartphone maker Xiaomi Corp is considering selling "all types of vehicles for transport, conveyance, and other transport equipment", according to a company filing to the Indian government.

The increasingly ubiquitous tech-auto tie-up would help satisfy Chinese users' big appetite for in-car connectivity features, according to experts.

Around 64 percent of Chinese consumers polled by consultancy McKinsey said they are willing to switch brands for better in-car connectivity functions. That contrasts with 37 percent in the United States and 19 percent in Germany.

"In China, connectivity such as synchronization between phone apps and car services…is a must-have feature, and people are more willing to pay subscriptions for content (on digital platforms) than customers elsewhere," said Wouter Baan, associate partner at McKinsey's Beijing office.

Electric cars are set to become an increasingly lucrative investment target, thanks in part to global and national initiatives to lower emissions and put cleaner vehicles on the road.

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