China’s electric car start-ups – NIO, Xpeng and WM Motor – each have a Big Tech backer. What is riding on their success?

Name: Nio enhances production efficiency amid rising orders for its electric-powered SUVs
Uploaded: 2020-12-29T12:00:12.000Z
Duration: 1 min 21 s
Description: Nio enhances production efficiency amid rising orders for its electric-powered SUVs

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People wearing face masks look at a NIO ES6 electric car at the Beijing International Automotive Exhibition, in Beijing, on September 27, 2020. Photo: Reuters

Daniel Ren

Published: 8:00pm, 29 Dec 2020Updated: 3:41pm, 26 Jan 2021

China’s electric vehicle (EV) industry may be witnessing intense rivalry among a handful of promising start-ups churning out new models and boosting production to cater to the demands of the world’s largest electric car market.

Behind this rivalry is an equally intense battle between the country’s top technology companies – e-commerce giant Alibaba Group Holding, social media juggernaut Tencent Holdings and search engine Baidu Inc. The trio has financially backed newcomers like NIO, Xpeng and WM Motor, plying them with technology which they hope will create synergies between them and define the future of mobility.

“At the end of the day, it is a competition of technological strength in the EV industry,” said Cao Hua, a partner at the private equity firm Unity Asset Management. “It is important for them to have powerful backers who can offer both financial and technological support.”

Although none of these EV start-ups has been profitable so far, each has raised billions of dollars from the online tech giants as they look to put their technology in internet of things, 5G, cloud services and artificial intelligence to use in autonomous driving, navigation and in-car entertainment. The race is to define and set the industry standard and generate a steady stream of revenues either through licensing their technology or through digital subscription services.

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Nio enhances production efficiency amid rising orders for its electric-powered SUVs

In this pursuit, the EV makers and their backers have the support of the Chinese government, which wants the country to lead the world in such technologies by 2025 and wants to see 30 per cent of cars sold by then to have smart connectivity.