Chinese answer to Tesla Xpeng rumored to raise $600-$700 million at $4 billion valuation

Chinese electric vehicle startup Xiaopeng Motors (Xpeng) is reportedly in talks with Alibaba and other investors to raise $600 million to $700 million, our sister site is reporting (in Chinese). The investment would put Xpeng’s valuation close to $4 billion. Xpeng’s spokesperson declined to comment on the company’s fundraising plans.

In April, He Xiaopeng, co-founder of Xpeng, revealed in an interview at Boao Forum for Asia that the company expects to raise over RMB 10 billion this year and that it will be announcing fundraising plans soon. He said the future investment will be devoted to three main areas: first, team expansion and R&D; second, production base and supplier partnerships; third, branding, market, sales, and after-sales services.

Xpeng is planning to expand its team from the current 700 to 3000 by 2019. The startup also recently opened a research center in Mountain View after setting up a US-based R&D team last December to focus on autonomous driving technologies.

In January, the four-year-old startup raised a total of RMB 2.2 billion ($350 million) in a Series B funding round led by Alibaba, Foxconn, and IDG. After the completion of the fundraising, Xpeng has raised over RMB 5 billion from the capital markets.

Xpeng, often compared with Tesla, is hoping to build a quality low-priced smart vehicle for young buyers in China who can’t afford a Tesla. The car manufacturer is among the slew of Chinese EV startups that have sprung up in recent years after the government started granting special manufacturing permits to help electric car manufacturers in China.

According to BloombergNEF forecast, more than half of all new car sales will be electric by 2040. Having poured billions of dollars into Chinese electric car manufacturers, investors have high hopes for the EV sector in China—the world’s largest auto market.

However, also according to Bloomberg, China is considering further cutting EV subsidies next year in hope to push the innovation front of domestic EV industry rather than having car manufacturers rely on fiscal policy.