Tencent-backed electric-car start-up ropes in Toyota’s China partner for self-driving cars
Shanghai-based electric vehicle start-up NIO has forged a strategic alliance with GAC Group, which manufactures cars with Toyota and Honda in China.
NIO, the Shanghai-based electric vehicle start-up backed by Tencent Holdings and Baidu, added Toyota’s China partner to its list of allies as it sought to secure access to manufacturing know-how and shorten its learning curve.
Formerly known as NextEV, NIO on Thursday signed a strategic cooperation agreement with GAC Group, which produces cars with Toyota and Honda in China.
The start-up will own 55 per cent of the joint venture, which will explore connected cars and autonomous driving technologies, engage in vehicle research, share suppliers and develop a car-rental business, according to a statement by Guangzhou-based GAC.
NIO is one of a few dozen electric car start-ups that have sprouted in recent years after China’s government started handing out special manufacturing permits to companies outside the traditional car making industry. To encourage sales, the government also gave out research and development grants and consumer subsidies, and exempted new-energy vehicles from ownership quotas in its biggest cities.
China’s plan to promote electric vehicles as a way to cut down on its reliance on imported oil and reduce pollution has also dovetailed with its other aim of gaining leadership in key internet-based technologies. Connected and self-driving cars are seen as the natural amalgamation of several complementary technologies that China is seeking to dominate.
Backed by Chinese tech giants such as Tencent, Baidu and Xiaomi, NIO also counts Singapore’s Temasek Holdings and Tesla’s second-biggest institutional investor Baillie Gifford & Co among its shareholders.
Other aspiring electric car manufacturers based in China include WM Motor, Byton and Xpeng.
Started in 2014 by internet entrepreneur William Li Bin and other investors, NIO has previously been reported to be valued at US$5 billion.
The company declined to comment on its valuation. It received US$1 billion in a fifth round of fundraising in November, according to VentureSource.
Earlier this week, China unveiled a three-year plan to step up economic competitiveness, with automobiles as one of the nine key industrial sectors. Chinese carmakers are encouraged to develop crucial hardware for autonomous driving and “improve cost efficiency for the production of electric batteries”, according to the plans published by the National Development and Reform Commission.
China has also decided to extend a tax rebate on the purchases of electric and hybrid cars till the end of 2020, giving the highly competitive market a further boost.
NIO unveiled its first model, the ES8, earlier this month with a base price of 448,000 yuan (US$67,788) before subsidies. Tesla’s Model X, by comparison, starts at 836,000 yuan after import duties.
Alongside that model, NIO also unveiled a battery-swapping service which can be done in three minutes. The company plans to build more than 1,100 power swap stations by 2020 and this week teamed up with China Southern Power Grid to roll out charging facilities.