HONG KONG -- Xpeng Motors, one of China's most high-profile electric vehicle startups, has secured $500 million in its latest funding round, giving it further firepower as rivals join an intensifying hunt for capital to ensure their survival.
The new funds came from investors including Aspex, Coatue, Hillhouse and Sequoia Capital China, seven months after Xpeng raised $400 million from Chinese smartphone maker Xiaomi and Xpeng founder He Xiaopeng, among others.
Guangzhou-based Xpeng is one of the few remaining EV companies in China after years of fierce, cash-burning competition that has ended the hopes of hundreds of other startups in the sector. Lower state subsidies and the economic slowdown triggered by the coronavirus pandemic have also clouded the once-booming industry.
Last month, five-year-old Xpeng started delivering its second model, the P7, an electric sedan that allows partly autonomous driving. In May, it secured a production license for its Zhaoqing factory in southern China. The plant took two years to build with an investment of 10 billion yuan ($1.4 billion) and has an annual capacity of 100,000 vehicles, according to the company.
Xpeng also counts Alibaba Group Holding and iPhone assembler Hon Hai Precision Industry as early investors. It launched its first all-electric model, the G3 SUV, in 2018. Both its models are priced lower than those of competitors Tesla, of the U.S., and Nio, another Chinese make.
China's electric car market has become more crowded since Tesla lowered the price of its China-made Model 3 vehicles this year, a move analysts expect to threaten domestic players.
No big Chinese EV maker has turned a profit, and even the front-runners are finding it increasingly difficult to raise money as investors such as venture capital firms turn more cautious.
This month Byton, one of the "four dragons" in China's EV industry -- which includes Nio, Xpeng and WM Motor -- suspended operations and production in China for at least six months and let go most of its noncore workers overseas after a failed attempt to obtain funds.
Other companies have had to resort to other measures to secure a lifeline. Nio, which in March told investors that it might not have the liquidity to survive another 12 months, secured 7 billion yuan from entities led by the municipal government of Hefei after Nio, which was founded in 2014 in Shanghai, agreed to transfer assets and businesses to a Hefei-based company and gave the new investors a 24.1% stake.
Nio's New York-listed shares have subsequently reached historical highs after the company reported strong deliveries in the second quarter and said it had secured credit lines worth 10.4 billion yuan from six domestic banks.
Encouraged by the stock rally of Nio and Tesla, Li Auto, a Beijing-based EV startup, has filed an official application to list on the Nasdaq exchange. The five-year old company began mass production of its first model, the Li One, a plug-in hybrid SUV, in November last year.
Local media reported that Li Auto finished a new round of financing totaling $550 million in June from investors including Chinese group-buying website operator Meituan Dianping.