China’s Nio Capital aims to build alliance among carmakers to share new technologies
The venture capital arm of electric vehicle start-up Nio aims to get a third of all Chinese car makers to share the technologies of companies it invests in
Nio Capital, the venture capital arm of Chinese electric vehicle maker Nio, is investing in automotive technology and energy start-ups with the ultimate goal of getting at least one-third of all Chinese carmakers to adopt and share the new technologies.
Ian Zhu, a partner at Nio Capital, said the traditional way of innovation used for combustion engine cars needed a shake-up, as disruptive technology had now put the industry into unfamiliar territory straddling energy, artificial intelligence and digital content. This made a collaborative approach among carmakers necessary as they could no longer operate in silos.
“Through getting at least one-third of Chinese car makers into an alliance, larger carmakers can enjoy the best car components and technologies that we have invested in. For example, our battery swapping stations should be able to swap batteries for electric vehicles made by multiple manufacturers,” Zhu said. He did not elaborate on the proposed alliance.
Nio Capital’s overall strategy is to invest in companies in the entire ecosystem of new energy, intelligent and connected vehicles. Zhu has named the approach the “blue sky alliance”, which he said resonates with Nio Capital’s Chinese name, Weilai, which connotes blue skies ahead.
“In autonomous driving and connected cars, there are a lot of technologies that need to be co-developed. You need advanced algorithms, content, big data, internet of things, etc. These companies today are not yet an integral part of the supply chain of the automobile sector, hence, you need help from start-ups and tech giants alike,” said Zhu.
Nio Capital, which manages a 10 billion yuan (US$1.5 billion) fund, was co-established by Nio and investment firms Sequoia and Hillhouse Capital in the central Chinese city of Wuhan a year ago, and counts Hubei Yangtze River Industry Fund as an anchor investor.
It has invested in 16 start-ups in China. Zhu said about a third of the 10 billion yuan has been invested.
Nio Capital invests independently of Nio, and not all of the 16 start-ups serve the car maker. For example it has put money into a carpool app called Dida Pinche as well as premium car-rental service Shouqi Limousine & Chauffeur and autonomous driving technology start-up Momenta.
Investments serving Nio include a car component company that supplies in-vehicle electricity chargers and a company that makes carbon fibre components that will make vehicles lighter.
Zhu said that the fund may also invest in other car makers.
In November, Nio Capital was reported to be raising a new fund of up to US$500 million. Zhu declined to confirm the amount but said around 70 to 80 per cent of the capital raised would be invested in China.
Nio the carmaker, which is backed by Chinese internet giants Tencent Holdings and Baidu, has formed a joint venture with Guangzhou-based GAC, which is already the Chinese joint-venture partner for Japanese carmakers Toyota and Honda.
Nio and GAC will explore connected cars and autonomous driving technology and share suppliers. Previously, Nio has formed similar partnerships with Chongqing Changan Automobile and Anhui Jianghuai Automobile to make electric cars.
Nio plans to build more than 1,100 power swap stations by 2020, and in December launched its first electric sports utility vehicle, the ES8, and laid out plans to offer mobile charging with vans equipped with battery packs and on-board chargers.
China’s Ministry of Industry and Information Technology has said that annual production and sales of new energy vehicles would reach two million units by 2020, or roughly four times the number sold today.