Chinese Tesla Rival Backed by Famed Silicon Valley Investors

Published By : 18 Sep 2015 | Published By : QYRESEARCH

Tesla, a high-end electric car firm that tapped an old Silicon Valley company for funding, is about to face competition from a startup firm. Silicon Valley’s best known and oldest investment company, Sequoia Capital, recently funded a Chinese rival NextEV, to Tesla. The investment is considered to be unusual for Sequoia Capital and has taken a relatively successful and conservative approach of investing in the startups. By avoiding the overhyped sectors, the company decided to invest in the startups. Particularly, the electric car startup companies require more funding to kick-start their business and can be risky in today’s cut-throat competition. It is not yet clear about the money that Sequoia Capital will invest into China’s startups. 

According to a spokesperson, Sequoia Capital confirmed their investment with Fortune. NextEV has a strong founding team and EV sector will have a great potential, added the spokesperson. According to Bloomberg, NextEV, a Shanghai based firm has planned to raise $0.5 bn with an intention of raising another $1.0 bn to manufacture a high-end electric car by 2016. Manufacturing a new high-end electric car will require around $1.0 bn minimum. Tencent, a Chinese internet giant, Joy Capital, and Hillhouse Capital, are some of the investors of NextEV, who invested in Tuhu, a Chinese automotive service company.

Few years back, venture capital peers of Sequoia Capital such as Khosla Ventures, Kleiner Perkins, and NEA, made daring bets on cleantech. Many of the risky and larger investments such as Fisker Automotive, an electric automobile company, lost money in the bet. Inspired by the success of Tesla, many startup companies began to compete against it. Though the market for electronically operated vehicles is comparatively small in the current automotive industry, it has developed considerably since the time when Tesla was found in 2003. The Chinese government is encouraging start companies, and non-automotive firms to invest and contribute in electric vehicles. Xiaomi Technology, and Alibaba, a smartphone maker and internet giant in China respectively, have invested in electric automobiles. 

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