SAIC Motor, an early adopter of the smart car, sets up US$1 billion fund to invest in internet-linked vehicles with Alibaba

SAIC Motor would invest 5.4 billion yuan to create the 7.2 billion yuan fund with Shanghai Zhangjiang Hi-tech Park Development, according to an exchange filing

Hengxu Capital will separately contribute less than 0.1 per cent of the fund’s capital to invest in smart electric vehicle technologies

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A driver demonstrates how to connect SAIC's Roewe RX5 sports-utility vehicle with his mobile phone using Alibaba's YunOS operating system on 6 July 2016. Photo: SCMP

Published: 3:26pm, 27 Nov 2020Updated: 9:33pm, 27 Nov 2020

SAIC Motor, China’s largest state-owned carmaker and the Chinese partner of General Motors, has established a private equity fund to finance its forays into developing smart cars with the country’s biggest technology company Alibaba Group Holding.

SAIC Motor would invest 5.4 billion yuan to create the 7.2 billion yuan (US$1 billion) fund with Shanghai Zhangjiang Hi-tech Park Development, according to an exchange filing. Hengxu Capital, a fund of funds platform under the carmaker’s SAIC Capital unit, will separately contribute less than 0.1 per cent of the fund’s capital, used in a collaboration with Alibaba (China) Network Technology to invest in smart electric vehicle technologies.

“SAIC’s investment plan and its collaboration with Alibaba add evidence to China’s ambition of taking the global lead in the development of smart vehicles,” said Gao Shen, a Shanghai-based independent analyst on the manufacturing industry. “A marriage between conventional carmakers and technology behemoth will prove to be effective.”

With the world’s largest market for automobiles since 2009, China is aiming to have more electric vehicles on the nation’s roads than anywhere else, and has poured tens of billions of yuan in subsidies, incentives and tax breaks into nurturing the development of vehicles powered by alternative fuels. Smart cars, or vehicles that use high-speed internet connectivity for navigation, in-car information and entertainment, also form a technological goal sought by policymakers.

Pedestrians outside Alibaba Group Holding’s building in Beijing on August 19, 2020. Photo: Bloomberg

Hundreds of technology companies from the biggest giants like this newspaper’s owner Alibaba Group Holding and the dominant internet search engine Baidu to start-ups are engaged in developing applications and hardware for the next generation of vehicles and redefine mobility.

Electric vehicle makes like LiAuto, Nio and Xpeng Motors are racing to churn out models that can challenge Tesla’s Model 3 sedan, the current market leader in the premium segment of China’s new-energy vehicle market.