China's Alibaba joins auto maker SAIC with plan to develop Internet-connected cars

SHANGHAI (AFP) - Chinese e-commerce giant Alibaba on Thursday joined the country's biggest auto maker with a plan to develop an Internet-connected car, following other non-traditional players such as Google making inroads into the industry.

Search engine Google has made headlines with its plans for a self-driving car and Apple - maker of iPhones and iPads - is reportedly planning to develop an electric car.

Alibaba and SAIC Motor announced they were jointly setting up a 1 billion yuan (S$221.5 million) fund to develop an "Internet car", the auto maker said in a statement on its official microblog. The project will "lead China's Internet car development", it said, but gave no details about the planned vehicle.

Alibaba said the future car would use technology - such as cloud computing and big data - to help provide a better driving experience. The connected vehicle will include services such as e-commerce, digital entertainment, maps and communications, it said.

Analysts believe technology companies are unlikely to launch mass production of cars, rather seeking to shake up the traditional auto industry and establish partnerships with manufacturers, helping to promote their own business lines.

Alibaba's partner for the project, state-owned SAIC Motor, already has joint ventures with General Motors (GM) of the United States and Germany's Volkswagen.

SAIC and GM also have a company which provides telematics - wireless information - services for vehicles manufactured and sold in China, including mobile apps and navigation help.

Alibaba, founded by entrepreneur Jack Ma in 1999, is China's biggest e-commerce company, estimated to hold more than 90 per cent of the country's market for consumer-to-consumer transactions.

Last month, Alibaba tested its first drone delivery service, echoing US online retailer Amazon, by whisking ginger tea to customers over three days in three Chinese cities.

Bloomberg News and a person familiar with the deal said on Thursday that Alibaba will also invest US$200 million (S$277.5 million) in Snapchat, the vanishing-image service.

US media reported last year that Snapchat - which allows the sending of text and photo messages that disappear seconds after being viewed - had held discussions with Alibaba.

A person familiar with the deal told AFP that Alibaba had committed to a $200 million investment. Alibaba declined to comment.

Bloomberg News, which also quoted sources on the investment, said the deal valued Snapchat at US$15 billion.

Snapchat's chief executive officer Evan Spiegel declined to comment, Bloomberg reported, quoting him as saying: "We are famous for not talking about the future."

Snapchat rocketed to popularity in the United States, especially among teenagers, after the initial app was released in September 2011.