Chinese EV startup Xpeng jumps into ride-hailing fray

May 17, 2019 14:30
Chinese electric carmaker Xpeng is making a foray into the country’s ride-hailing market. Photo: Xpeng.

Alibaba-backed electric car maker Xpeng Motors, last valued at US$4 billion, launched a ride-hailing service in Guangzhou, even as Didi Chuxing, the ride-hailing industry leader in China, is still finding ways to make a profit.

The EV startup, also known as Xiao-peng, started offering a ride-hailing app powered by its own fleet, after it received a ride-hailing operation license from Guangzhou authorities this week. The trial service, dubbed “Pengster”, is currently only available in a limited area within Guangzhou, the capital of southern China's Guangdong province, where the startup is headquartered.\

In an announcement, Xpeng said several hundreds of its G3 sport utility vehicles will be deployed for the service in the initial stage, with a plan to expand the fleet size to 2,000 within this year, as the ride-hailing scheme may expand to other cities across the country.

The service will only employ “trained, verified and monitored professional drivers”, it said.

Xpeng believes the new service will “allow Xpeng Motors to gain important operational experience from a diversified range of driving scenarios, [and] deeper understanding of customer behavior and preference”, the company said.

Founded in 2014, Xpeng has raised US$1.3 billion from big-name investors such as Alibaba, Xiaomi founder Lei Jun, Foxconn, UCAR, IDG Capital, Primavera Capital, Hillhouse Capital, GGV Capital, and K11 Investment, the venture capital arm of Hong Kong property tycoon Adrian Cheng’s K11 brand, according to disclosed funding data collected by Crunchbase.

In an interview with CNBC this March, Xpeng co-founder and chief executive He Xiaopeng said the startup is “not far-off” from an initial public offering, but the company would like to focus on building the business first.

Xpeng started shipping its vehicles in March, delivering about 2,200 units across the country by April.

China's ride-hailing industry has seen tightened government scrutiny following two high-profile cases in which female passengers were killed while using the service, and Didi Chuxing, although having cornered about 80 percent of the market, continues to rack up billions of yuan in losses.

Nonetheless, new entrants have emerged to challenge Didi’s leadership position. In December last year, Volkswagen China and Mercedez Benz have partnered to launch a premium ride-hailing service in Shanghai.

In January, Meituan Dache, the ride-hailing arm of China’s on-demand and delivery services giant Meituan Dianping (03690.HK), signed a deal to use auto startup WM Motor's first electric SUVs for its transport services. State-owned automaker Changan announced in March a partnership with Tencent (00700.HK) and Alibaba on a ride-hailing venture in Nanjing.

Seeking to exploit synergies between electric vehicles and the ride-hailing service, US-based electric vehicle giant Tesla announced in April its plan to launch the first batch of robotaxis by next year, part of a broader vision for an autonomous ride-sharing network, founder and CEO Elon Musk said.

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