Alibaba Group Holding Ltd (NYSE:BABA) Shows Interest In Connected Car

Alibaba Group Holding Ltd (NYSE:BABA) and SAIC Motor of China have teamed up to develop connected-cars. The companies have already set up a fund for the project, which is expected to open for more investors. In the car connectivity business, Alibaba joins the ranks of Google Inc (NASDAQ:GOOGL), Baidu Inc (ADR) (NASDAQ:BIDU) and other technology companies are also vying for a place in car dashboard.

Have technical analyst identified a strong wedge in BABA?

The joint venture between Alibaba Group Holding Ltd (NYSE:BABA) and SAIC Motor set up a $160 million fund, according to a notice by the two companies. In July, Alibaba and SAIC Motor formed an alliance through which they hoped to create integrated systems to enable cars to communicate with each other, pedestrians and the road. When the two companies announced their alliance last year, they didn’t provide more details about the size of the funding for the project. Therefore, the setting up of the fund marks the first major step in the cooperation of the two parties for behind-the-wheels presence.

Open for more investors

SAIC Motor and Alibaba are expected to allow other carmakers and investors to join their Internet connected-car project.

Alibaba Group Holding Ltd (NYSE:BABA) disclosed that it will create new services based on cloud computing and big data to enhance driving experience.

China, the world’s fastest growing economy, is the largest car market by sales. The number of passenger cars sold in China last year was nearly 20 million. Several multination automakers are jostling for a bigger slice of the Chinese auto market. The U.S. electric car maker, Tesla Motors Inc (NASDAQ:TSLA) is already selling its Model S sedan in the market and hinted at the possibility of setting a local factory in China in the next three or four years.

Battle for the car dashboard

The partnership of Alibaba Group Holding Ltd (NYSE:BABA) and SAIC can be likened to the several deals between technology companies and automakers in the recent times. For instance, Apple Inc. (NASDAQ:AAPL) has partnered with a number of automakers including BMW and Volvo to expand the adoption of its iOS for car connectivity. Google is also pushing for a bigger car dashboard presence with its Android OS and has Ford Motor Company (NYSE:F) and Audi AG among its car connectivity partners.

Chinese Internet search engine provider, Baidu, is also in connected car business. The company said it was creating systems to automate as aspects of driving like parking a car.

About the Author

Cooper is a graduated from Buffalo State College in New York with a bachelor's degree in Broadcast Journalism.

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