Electric vehicles are on the rise and startups in the domain are finding themselves able to raise funds from major players looking to get the early bird advantage. Chinese EV maker XPeng is the latest startup to raise a massive $400 Mn from a slew of investors that includes prominent names like Xiaomi.

The company is backed by several heavyweights including Alibaba, and Xiaomi’s entry serves as a further testament to its potential. The funds come at a crucial time, even as governments across the world – which were very excited at the prospect of EVs a few years ago – have started phasing out subsidies offered to startups in the niche, affecting their bottom lines.

Started by 42-year-old tech entrepreneur He Xiaopeng, XPeng is currently in its fifth year. The latest round of funding has valued the company north of $4 Bn, which a pretty impressive feat considering that it has mostly raised Yuan funding so far.

Speaking about the latest fundraise, He said:

The signing of the new fundraising, which not only attracted new strategic investors such as Xiaomi Corporation but also received strong support from many of our current shareholders, is a renewed endorsement of our long-term strategy.

Along with the $400 Mn hard cash, the company has also secured credit lines valuing in the hundreds of millions from a clutch of banks that includes the China Merchants Bank (600036.SS), China CITIC Bank (601998.SS) and HSBC (HSBA.L).

With this XPeng now has a significant war chest it can call upon to finance its activities before it reaches profitability. Which is important considering how fast EV companies burn through their money. Just consider the example Tesla, or the more extreme example of Faraday Future.

As per sources, the company plans to use some of its newly acquired funds towards research and development of autonomous driving-related software, mass production of its G3 sport-utility vehicle model and P7 sedan, and branding and expanding its retail network. All this is positioned towards increasing sales, which as we have seen is a critical factor in making or breaking companies in the EV domain.

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