Alibaba (NYSE:BABA) earns praise for its Chinese e-commerce business, but now it wants to earn praise as an electric vehicle market participant. In fact, Alibaba announced on Wednesday that it was taking steps to become a serious EV player. How? With a new partnership and a new Alibaba electric car, the company could soon represent the future of automobiles. So what does this mean for BABA stock?
For those unfamiliar with the latest EV news, Alibaba announced on Wednesday it was partnering with state-owned SAIC Motor. The result of the latest venture is an Alibaba electric car and a new brand, IM.
With that in mind, here is what you need to know now about the Alibaba electric car and BABA stock:
- Alibaba unveiled its new all-electric sedan on Wednesday, as part of the brand IM.
- Investors should note that the brand IM is part of a joint venture.
- This joint venture includes Alibaba, SAIC Motor and Shanghai Zhangjiang Hi-Tech Park Development.
- These three companies officially launched the venture on Dec. 25. SAIC is the largest shareholder, with a 54% stake.
- The new brand IM stands for Intelligence in Motion — suggesting the Alibaba electric car will prioritize artificial intelligence.
- So what do you need to know about the actual Alibaba electric car?
- To start, it comes with a battery from Contemporary Amperex Technology (CATL), and this battery is higher-density than others in the market.
- It also features chips from Nvidia (NASDAQ:NVDA).
- The Alibaba electric car can self park, take photos and post on social media.
- Investors should note that the sedan, which is a bit smaller than the Nio (NYSE:NIO) ET7, will launch in April 2021.
- Additionally, Alibaba plans to release an all-electric SUV as part of the joint venture.
The Alibaba Electric Car and BABA Stock
So why does the Alibaba electric car matter for BABA stock? And how should investors even be considering Alibaba shares given U.S.-China tensions and the rumors surrounding founder Jack Ma?
To start, it is important for investors to consider the magnitude of the EV market in China. Alibaba recognizes this, as do many investors. Think about the hype surrounding Nio, and the fact Alibaba is a major Xpeng (NYSE:XPEV) backer. With that in mind, it makes sense that Alibaba wants to up its EV footprint. Additionally, the Chinese government is pushing for greater EV adoption. By 2025, officials in Beijing want electric cars to account for 20% of total sales.
Lastly, the picture for Alibaba may not be that bleak. Although Ma is out of the spotlight, CNBC recently confirmed that the founder is not missing. And things do look brighter on the U.S.-China front. As of today, President Donald Trump has backed away from plans to delist Alibaba and peers Tencent (OTCMKTS:TCEHY) and Baidu (NASDAQ:BIDU).
With all of this in mind, the Alibaba electric car is an intriguing catalyst for BABA stock. Be sure to keep this latest EV news on your radar.
On the date of publication, Sarah Smith did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Sarah Smith is a Web Content Producer with InvestorPlace.com.