Xiaopeng Motors, the electric car start-up backed by Alibaba Group Holding, is poised to take a big step forward in its goal to challenge Tesla, when its first production electric sport utility vehicle is unveiled at the annual CES trade show in Las Vegas next month. The high-profile launch in the world’s biggest consumer electronics show would mark a major milestone for the Guangzhou-based company known as Xpeng, as its latest 5 billion yuan (US$765 million) financing round is expected to be completed by the Lunar New Year holiday late next month, according to co-founder and chairman He Xiaopeng. The international debut of Xpeng’s electric SUV, dubbed the Identity X advanced edition 2.0, will also likely escalate a brewing rivalry in the electric vehicle industry between internet giants Alibaba and Tencent Holdings , which bought a 5 per cent stake in Tesla for US$1.8 billion in March this year. “Design, mileage range, quality and autonomous driving experience of the 2.0 version will be a big step-up [from the initial model]. It will surpass those [EVs] in the market priced at above 400,000 yuan,” said He in a letter to employees on Thursday. Xpeng’s compact electric car, which was introduced in China in October this year, offers an array of intelligent and internet-based functions, including auto parking, low-speed cruising, voice interaction and remote control. It can accelerate from zero to 100 kilometres per hour in 5.8 seconds, and has a battery range of 300km. The company’s initial batch of 1,000 production cars had a limited release to employees and selected customers in October. Tencent-backed electric-car start-up ropes in Toyota’s China partner for self-driving cars He provided no details on the price tag for the 2.0 edition of Xpeng’s four-wheel-drive electric SUV, which will hit the market in the spring of next year. “We hope all our customers can ditch their petrol cars in the garage and drive our cars, as well as offer advice that will enable us to lay a solid foundation for improvement,” said He. He, who co-founded Chinese mobile web browser company UCWeb and later served as president of Alibaba’s mobile business group, established Xpeng in 2014 with entrepreneur Henry Xia Heng and He Tao, previously the technology leader at Guangzhou Automobile Group Engineering. Apart from He, other prominent initial investors in Xpeng include David Li Xueling, founder of Nasdaq-listed Chinese live-streaming social media platform operator YY, Cheetah Mobile chief executive Fu Sheng and Free Wu Xiaoguang, a senior management adviser at Tencent. New York-traded Alibaba, which owns the South China Morning Post , reportedly holds a 10 per cent stake in Xpeng. In 2014, Alibaba bought the remaining shares it did not own in UCWeb, which valued He’s previous company at more than US$3.8 billion. Other financial backers of the EV start-up include GGV Capital, Morningside Venture Capital, IDG, MatrixPartners China, Shunwei Capital, Guangkong Zhongying Capital, Ding Capital, Kinzon Capital and Lightspeed Venture Partners. Xpeng is one of a few dozen Chinese electric car start-ups that have sprouted in recent years after the government started handing out special manufacturing permits to companies outside the traditional automobile industry players. Ride-hailing Ucar invests in China Tesla-challenger start-up To encourage sales, the government also offers research and development grants and consumer subsidies, and exempted new-energy vehicles (NEV) from ownership quotas in its biggest cities. China has been encouraging the spread of NEVs through incentives including the payment of various subsidies and the priority distribution of number plates, according to a report last week by Nomura analysts Manabu Akizuki and Sharon Tseng. In September this year, the Chinese government announced NEV regulations, corresponding to California’s own Zero Emission Vehicle programme, which are to be applied from 2019, the report said. We hope all our customers can ditch their petrol cars in the garage and drive our cars. He Xiaopeng, chairman of Xpeng Motors With that move, China’s policy will shift from a subsidy system to a mandatory approach through the NEV regulations, where there is less conflict with market principles. China’s promotion of EVs is not only a way to cut down on the country’s reliance on imported oil and reduce pollution, but also bolsters efforts at gaining global leadership in advanced technologies. Connected and self-driving cars are seen as the natural fusion of several complementary technologies that China is seeking to dominate. Chinese carmakers are encouraged to develop crucial hardware for autonomous driving and “improve cost efficiency for the production of electric batteries”, according to the three-year industrial blueprint published by the National Development and Reform Commission.