China’s Nio Capital aims to build alliance among carmakers to share new technologies

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.