China’s EV maker XPeng leads a $200M investment in Rockets Capital, a fund focused on backing electric vehicles and “frontier technology” startups

Chinese Tesla rival Xpeng announced it has led a new $200 million investment in Rockets Capital, a fund focused on “venture and growth-stage investments in Smart EV industry value chain, clean energy, and frontier technology areas.”

Backers in the fund include other high-profile venture capital firms such as IDG Capital, eGarden, Sequoia China, 5Y Capital, and GGV Capital. According to the announcement, the new fund will focus on backing electric vehicles and “frontier technology” startups.

XPeng said the fund will leverage XPeng’s “industry expertise and resources” and “incubate technological innovation” and Rockets Capital will operate independently from the company.

The fund comes amid dramatic growth in the electric vehicle industry. Two years ago, the electric vehicle (EV) market was valued at $171. 6 billion. The market is expected to reach a value of $725.14 billion by 2026. Market research firm Gartner also forecasts 6 million electric cars will be shipped this year alone.

XPeng did not expand on what “frontier technology” would include, but China’s government has identified several areas that fall under this umbrella, including artificial intelligence and semiconductors.

The latest fund comes as the electric vehicle industry is expected to continue its growth. Market research firm Gartner forecasts 6 million electric cars will be shipped this year versus 4 million in 2021.

Rockets Capital managing partner Bing Yuan said the closing of the fund is a “testimony that in the constantly evolving investment industry, the low carbon economy and technology-driven development are the consensus investment trends.”

Founded in 2014 by Henry Xia and He Tao, former senior executives at Guangzhou Auto with expertise in innovative automotive technology and R&D, the Guangzhou, China-based Xpeng Motors is a leading Chinese electric vehicle company that designs and manufactures automobiles that are seamlessly integrated with the Internet and utilize the latest advances in artificial intelligence. Xpeng’s backers include IDG Capital, Alibaba Group Holding, and Xiaomi among the major backers.