Alibaba Unveils New Electric Vehicle Partnership
- By Graham Griffin
Chinese mobile and online commerce giant Alibaba Group Holding Ltd. (NYSE:BABA) has revealed a new partnership with state-owned SIAC Motor Corp Ltd. (SHSE:600104), the country's largest car company, to produce a new electric vehicle brand.
The brand known as IM, or "intelligence in motion," is primarily owned by SIAC with a stake of 54%. Alibaba and a third partner each own an 18% stake in the company as reported by Nikkei Asia.
The new car features a new solid-state battery that has been developed by Contemporary Amperex Technology Co. Ltd. (SZSE:300750) that is claimed to have a higher energy density than batteries that are currently in use. The vehicle will also feature the ability to self-park and is set to integrate features from smartphones like social media sharing. It will be powered by a Nvidia Corp. (NASDAQ:NVDA) system.
Hong Kong-based Morningstar analyst Ivan Su said, "The partnership will help SAIC add more premium models to its portfolio, thanks to Alibaba's reputation." IM is set to begin taking orders for the vehicle in April at the Shanghai Auto Show and is planning on offering an SUV model in 2022.
Alibaba
Alibaba is the world's largest online and mobile commerce company. It operates China's most-visited online marketplaces, including Taobao and Tmall. Alibaba's China marketplaces accounted for 68% of revenue in fiscal 2019, with Taobao generating revenue through advertising and other merchant data services and Tmall deriving revenue from commission fees.
On Jan. 14, the stock was trading at $242.98 per share with a market cap of $657.42 billion. According to the GF Value Line, the stock is trading at a modestly undervalued rating.
GuruFocus gives the company a financial strength rating of 7 out of 10 and a profitability rank of 9 out of 10. There are currently two warning signs issued for declining gross and operating margins. The cash-to-debt ratio of 3.37 outranks 80.41% of companies and value should grow alongside the company thanks to a healthy return on invested capital.
Disclosure: Author owns no stocks mentioned.
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This article first appeared on GuruFocus.
