Carmakers Chongqing Changan Automobile, Dongfeng Motor and FAW have joined e-commerce firm Alibaba, internet group Tencent and retail conglomerate Suning to form a RMB9.76bn ($1.46bn) investment entity, the New York Times reported today.
The joint venture will invest in the on-demand ride service sector, with a particular focus on vehicles running on renewable energy. It also intends to establish its own, as-yet unnamed China-based ride hailing business.
The corporates, all of which are headquartered in China, were joined by a range of unspecified funds, and Alibaba, Suning and Tencent provided their share of the capital through unnamed investment vehicles.
Suning is the vehicle’s largest shareholder, with a 19% stake, while Chongqing Changan Automobile, Dongfeng Motor and FAW own 15% each. Alibaba and Tencent hold the remainder of the shares together with the undisclosed funds.
The new entity is expected to face stiff competition from Didi Chuxing, which reportedly takes 90% of all bookings in a Chinese ride hailing market estimated by consulting firm Bain & Co to be worth roughly $23bn. Alibaba and Tencent are both also among Didi Chuxing’s investors.
Suning told Reuters the newly formed business would help form “business synergies which will help enrich the companies’ ecosystems,” without offering further details.
