Xpeng raises $500 million even as China EV market sputters

Electric-vehicle maker Xpeng Motors Technology Ltd. raised about $500 million from a group of venture investors, showing Chinese startups with promising car models can attract funding even as the industry’s sales slump.

Investors in the Series C financing round include Sequoia Capital China, Hillhouse Capital, Coatue Management and Aspex, Xpeng said Monday in a statement. The fundraising follows a $400 million round in November.

Xpeng is increasing its chances of staying as a viable contender in the world’s largest electric-car market, where it competes with sales leader Tesla Inc., local peers such as NIO Inc. and such global rivals as BMW AG and Mercedes-Benz maker Daimler AG. Though industry sales have been sputtering since the government scaled back subsidies last year, the market is in its early stages.

Other aspiring EV makers have run into funding problems and wound down operations this year amid the market slump, which was exacerbated by the coronavirus pandemic. Meanwhile, competition is getting tougher, with the number of new Tesla users rising to a record and BMW and Mercedes bring out EV models.

Founded in 2015, Xpeng’s backers also include e-commerce giant Alibaba Group Holding Ltd. and Xiaomi Corp.