MAJOR domestic carmaker SAIC Motor Corp. is starting a 1 billion yuan (US$160 million) fund with e-commerce giant Alibaba Group Holding Ltd. to develop Internet-connected cars that may go on sale next year.

    Alibaba, Asia’s largest Internet company, and SAIC Motor are setting up a joint venture and aim to launch their first car in 2016. The 50-50 venture will be opened to other investors in future, according to a spokeswoman for Shanghai-listed SAIC Motor.

    Alibaba is the latest to join a clutch of Internet companies foraying into connected vehicle projects as China encourages companies outside the traditional auto industry to tie up with existing manufacturers to spur innovation and competition.

    Chinese Internet companies and auto makers have been quick to team up to start developing partly self-driving and Internet-connected cars, following a path already trodden by U.S. tech giants Google Inc. and Apple Inc.

    Internet giant Baidu Inc., which leads China’s search market and competes with Alibaba in some areas, is developing cars that are shifting parts of driving toward automation, working with companies like Germany’s BMW AG.

    Shenzhen-listed Leshi Internet Information & Technology (Beijing) Co., a maker of Web-enabled TVs, has also said it would invest billions of dollars into developing a connected electric car.

    “In the age of the Internet economy, cross-boundary integration has become an inevitable trend,” SAIC Motor said in a statement Friday. “The cars of the future must be Internet-oriented.”

    Besides providing cloud computing, Alibaba will also add digital entertainment, maps and financial data, the Hangzhou-based company said on its microblog.

    (SD-Agencies)