State-backed automaker SAIC Motor has initiated a new project to produce high-end electric vehicles, the latest expansion move by Chinese car makers enticed by a rosy outlook for new-energy vehicles.

SAIC, one of China's largest car makers by sales volume, said last Thursday that it has teamed up with Shanghai Zhangjiang Hi-Tech Park Development, and Alibaba Group Holding to run the project called ZhiJi.

ZhiJi will launch luxurious electric-vehicle models, SAIC said, without providing details on the timeline, pricing or sales target.

Zhiji Auto is expected to make appearances next year at auto shows in Shanghai and London and at the Consumer Electronics Show in Las Vegas, and it will introduce a sedan and a sport utility vehicle.

SAIC Motor and Alibaba started cooperating on smart cars in 2015, and jointly founded an Internet of Vehicles technology firm called Banma Network. 

Alibaba's role is more of a technology provider for the project, a company spokeswoman said.

SAIC said it will commit 5.4 billion yuan ($821.2 million) to finance the project. State-owned Shanghai Zhangjiang Hi-Tech Park Development Co. will contribute another CNY1.8 billion.

The news sent shares of both companies soaring on Friday. SAIC's shares closed 8.5% higher at CNY27.80 after touching the daily trading cap of 10%, while those of Zhangjiang Hi-Tech Park Development jumped 10%.

Auto sales in China started to recover in the second quarter after being wrecked by the coronavirus pandemic in the first quarter. In particular, growth in the premium market and the new-energy segment have outpaced that in the mass market.

In October, sales in the high-end market rose 30% from a year earlier, while sales of new-energy vehicles, the bulk of which are electric cars, more than doubled, according to industry associations.

China has also set an ambitious target to have new-energy vehicles account for around 20% of the country's total new auto sales by 2025.

The high-end NEV market in China is set to get crowded next year, with both foreign and domestic makers expected to launch more premium models.

Sources: WSJ,Yicai Global

More on lauches of high-end NEV

Changan to develop high-end EVs with CATL, Huawei

Dongfeng’s High-end EV brand VOYAH Debuted Its first Concept Car

BAIC brand Arcfox launches debut BEV in China

SAIC Motor to launch high end new-energy vehicle brand