Ride-hailing Ucar invests in China Tesla-challenger startup
Ucar, a ride-hailing app launched by Hong Kong-listed China Auto Rental (Car Inc), has led a 2.2 billion yuan (US$324 million) investment into a Tesla-challenger in China, making its foray into automobile manufacturing.
Beijing-based Ucar announced on Monday that it has set up a 10 billion yuan fund focusing on future automobile technology with its first investment going into Chinese electric vehicle start-up Xpeng Motors.
Lu Zhengyao, chairman and chief executive of Ucar, said setting up of the fund was a “milestone event” to expand the business to the cover the entire auto value chain.
“We are already the single largest vehicle buyer in the country and we have a strong sales network and rich service offerings for people to ride in cars,” he said without disclosing the investment amount into Xpeng.
In addition to the financial injection, Ucar will also help Xpeng enhance product manufacturing, setting up a sales and after-sales network, and its big-data-enabled marketing, said the company in a statement.
Founded in 2014, the Guangdong province-based Xpeng, is one of a dozen of Tesla challengers in the mainland, betting big on using the power of the internet to disrupt the traditional car-making industry.
With founders including some of China’s most well-known internet entrepreneurs, including Cheetah Mobile’s chief executive Fu Sheng and YY’s co-founder Li Xueling, Xpeng claims that it is China’s first internet carmaker to be able to mass-produce electric vehicles and with a goal to roll out cars from its production line this year.
“By investing in car makers, Ucar is able to diversify its core ride-hailing business, which may lose its growth momentum since the Chinese government introduced tighter control over the sector,” said Zhang Xu, analyst with the Beijing-based internet consultancy Analysys.
Unlike Didi Chuxing, which drove Uber Technologies out of China market in 2016, Ucar uses an in-house fleet of cars, and has licensed drivers servicing 122 cities in China as of April, a strategy that has largely helped it avoid the regulatory hurdles obstructing other ride-hailing companies in China.
“But to seek better business performance, ride-hailing is not enough as none of the country’s ride-hailing apps have turned profitable. It has to find ways to reduce cost and add other services to make profit,” Zhang added.
Launched in January 2015, Ucar began as a chauffeured car service provider, but it has since expanded to automobile e-commerce and financing.