Tesla is the leader in China’s vibrant EV market but the funds raised by Chinese challengers show the sector is set for a big battle over the next few years
Tesla is the leader in China’s vibrant EV market but the funds raised by Chinese challengers show the sector is set for a big battle over the next few years © Bloomberg

Hi everyone. This is Kenji in Hong Kong. The main message we wish to share with you this week is that “prime time” for Chinese electric vehicles has arrived and the battle is on against Tesla. We just saw the largest single round of EV start-up financing by Shanghai-based WM Motor and a big chunk of the $1.5bn in funding came from various state-backed investors (Big Story). This type of state-led support is something we have already witnessed in artificial intelligence (Smart data).

US-China tech tensions remain intense. While the US TikTok deal has descended into confusion, the FT has a forecast by Frank Long from Schmidt Futures that the next front line would be in video games (Mercedes’ top 10). Turning to India, Apple is opening its maiden online shop there as the US company diversifies away from China (Mercedes’ top 10). The Modi administration has done many things wrong in dealing with the pandemic but amid it all, it did one thing that has helped nurture a new online industry (Best of comment). The virus is still rampant, not only in India. In Hong Kong, a so-called “third wave” appears to be largely under control. Let us not be complacent and stay safe until next week.

The Big Story

China’s competitive firepower against Tesla is building. WM Motor, an electric vehicle start-up backed by a host of powerful Chinese state entities and tech giant Tencent, raised $1.47bn in a single round of funding in an indication of the surging ambitions animating China’s EV market.

The funds raised — believed to be a record for a single round in China’s EV market — swell the war chest of key Chinese companies that are vying to reel in Tesla’s striking market lead. It also reinforces a sense that prime time for Chinese EVs has finally arrived as McKinsey, a consultancy, increased its forecast for Chinese electric car sales by 300,000 to 3.5m in 2022, up from 1.2m last year.

Key implications: China’s EV makers are riding a wave of consumer enthusiasm for EVs largely created by Tesla, which has been ramping up production at its $2bn Gigafactory outside Shanghai to satisfy surging domestic and overseas demand for its Model 3.

Xpeng Motors, which is backed by ecommerce group Alibaba, raised $1.5bn in New York in August and Li Auto, a rival, raised $1.1bn on Nasdaq in July. Nio, another Chinese EV maker, received a cash infusion of $1bn in April and recently recorded its first quarterly profit.

WM Auto’s investors reveal the depth of China’s EV vogue. Its latest fundraising was led by SAIC Motor, one of China’s largest state-owned car companies. The government of Hubei province and the cities of Suzhou, Hengyang, Hefei and Guangzhou also participated.

Upshot: Tesla is the runaway leader in China’s vibrant EV market but the funds raised by Chinese challengers and the pedigree of their state and corporate backers show that the market is set to become a battle royale over the next few years.

Mercedes’ top 10

  1. Mysterious Chinese businessman Wang Jing is poised for his next big adventure. The man who famously secured a deal to build a $50bn Nicaraguan rival to the Panama Canal — and then did little about it — now looks likely to take control of a storied Ukrainian aircraft engine maker.

  2. The US deal on TikTok has descended into confusion. Two days after the White House gave its blessing to a deal to keep TikTok alive in the US, confusion over who would own and control the popular short-video app threatens to derail the process.

  3. What will be the next US-China tech battleground after TikTok? The next skirmish is likely to be the video game industry: only last week, Donald Trump’s administration indicated it was worried about the security of personal data held by games.

  4. Apple is launching its first online store in India to increase sales and manufacturing capacity in the country, as US companies work to diversify their supply chains outside China.

  5. China, the world’s biggest producer of greenhouse gases, promises to cut its carbon dioxide emissions to nearly zero by 2060. The goal will require a radical reshaping of China’s economy, providing opportunities for “clean tech”.

  6. Sony’s head of games has admitted that the Japanese group’s new console may be its last, as it unveiled the pricing of its PlayStation 5 in anticipation of a fight with rival Microsoft over next-generation technology.

    © Bloomberg
  7. Which country is leading the high-stakes race for dominance in battery technology? According to patent filing data, Japanese companies such as Panasonic and Toyota Motor are outstripping South Korean rivals so far.

  8. The buzz is building ahead of Ant Group’s upcoming IPO in Hong Kong and Shanghai — potentially one of the world’s biggest equity raisings. Some investors are scrambling to buy stock from existing owners as FOMO, or “fear of missing out”, on the IPO increases.

  9. HKTVmall, Hong Kong's leading ecommerce operator, is laying down a challenge to Amazon. It plans to offer its services to retailers in Asia and Europe through new bases it plans to establish.

  10. What if aircraft passengers and cargo could be housed in a wing? You might have to wait till 2040, but the Flying-V aircraft might just be the future of long-haul travel.

When sages speak

  • How do you move money from a digital wallet in, say, Kenya to one in China? The answer is that it is not easy. But drawing on 25 years of experience in fintech, Peter De Caluwe’s start-up is creating networks for cross-border transfers in emerging markets. He talks to GGV Capital’s Hans Tung in this podcast.

  • There are no winners in the US-China technology divide, writes Jonathan Pollack at Brookings. No matter who is elected US president in November, China will seek to reduce its dependence on the US and accelerate the development of indigenous technologies to protect against Washington’s unpredictability and hostility.

  • This report, while not directly about tech, offers groundbreaking insights into how to assess whether or not China is headed toward an economic crisis. Logan Wright, Daniel Rosen and Lauren Gloudeman make an important contribution.

Best of comment

The Indian government led by prime minister Narendra Modi has had a series of policy failures in coping with the Covid-19 pandemic, writes Ken Koyanagi, the Nikkei Asian Review’s Editor-at-large.

But there is one government measure that is considered as having been a timely success: a regulatory framework regarding telemedicine services that the government announced on March 25, the same day the lockdown started. It was rolled out at a key moment, as many Indians started avoiding hospital and clinic visits but still needed consultations and treatments from doctors and nurses.

A number of Indian start-ups had been trying to take pioneering steps in the telemedicine market before the release of the guidelines but had faced difficulties taking on physicians and other licensed medical professionals to their platforms, as the legality surrounding various online practices was unclear. The guidelines therefore helped clarify the situation and gave these start-ups a boost.

Mfine is a case in point. It is a Bangalore-based AI platform on which doctors interact with patients for consultation, diagnosis, treatment decisions and drug prescription. Since the end of February this year, it has seen the number of its partner hospitals double to about 520 and its doctors triple to more than 3,000. Its daily transactions are now three times as many as in February.

Spotlight

Nvidia’s chief executive Jensen Huang appears to have a strong streak of flamboyance — from his penchant for leather jackets to his tattoo based on the company’s logo to his love of flashy Ferraris.

But it would be a mistake to jump to conclusions about his personality. Instead, the crucial driver of what could be the world’s biggest semiconductor deal has all the hallmarks of a hardworking Silicon Valley tech entrepreneur.

Huang will need that in spades, as his $40bn acquisition of chip designer Arm Holdings from SoftBank is threatening to provoke a backlash from other Arm customers such as Apple. That the Taiwanese-born executive has ploughed ahead is a sign of just how much is at stake. Having brought Nvidia to the top of the chip industry through an unconventional route, he believes the deal could now help it become the dominant chip company of the AI age.

More from the FT’s Richard Waters here.

Art of the deal

  • Here’s a curious one: Tokyo-headquartered mobile gaming start-up Playco announced its existence on the same day it confirmed it was a unicorn. The company says it has raised $100m in Series A funding at a valuation of more than $1bn. But if you were hoping to see its games, that will have to wait until later in the year.

  • Over in India, mobile gaming platform Mobile Premier League has raised $90m from investors including SIG, early-stage tech investor RTP Global and MDI Ventures. MPL operates a pure-play gaming platform that hosts a range of tournaments. The app, which has amassed more than 60m users, also serves as a publishing platform for other gaming firms.

  • Singapore-based digital wealth manager Syfe has raised $18.6m in a Series A round led by US firm Valar Ventures. Other participants in the round include Presight Capital, and existing investor Unbound, the UK-based investment firm.

  • Sequoia Capital China is raising at least Rmb15bn ($2.2bn) in a new renminbi-denominated fund, reports Reuters. The fund, Sequoia China’s sixth, is likely to be the largest of its kind for the company.

  • Indian online education decacorn Byju’s said BlackRock, Sands Capital and Alkeon Capital have joined its $500m fundraising round. Since lockdown began the start-up has added 25m new students to its platform, taking it to 70m subscribers in total — 4.5m of which are paid.

Smart data

AI-related investments accepted by Chinese startups

Fundraising by Chinese AI start-ups has increased rapidly since Beijing announced a drive in 2016, writes Shuhei Yamada, Nikkei Asia Review’s Asia tech chief editor.

A total of Rmb237.8bn has been invested in AI in China since 1998, with 86 per cent of that money coming since 2016, the year when the government included the AI drive in its new five-year plan. Beijing led the city line-up in terms of funds attracted, showing the vibrancy of its AI start-up ecosystem in the current fundraising boom, according to a report compiled by the Chinese tech news portal 36Kr.

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