SAIC Motor Corp. Ltd., China’s largest car maker by sales, and e-commerce giant Alibaba Group Holding Ltd. will be joining forces and investing 1 billion yuan ($160 million) into a fund to develop an Internet-connected car.

The joint venture will be aiming to launch their first car in 2016. SAIC Motor said in a statement, that the fund would also be open to other investors who are interested in an Internet-connected car.

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

The two companies formed an alliance in July; however, the investment of $160 million into the fund is the first significant step forward. Their objective back in July was to develop “China’s first ‘Internet car’ for the future”, however, they did not disclose the size of the funding at that stage.

China takes the top spot as the world’s largest car market in terms of sales, with nearly 20 million passenger vehicles sold in 2014. SAIC, which was founded in 1940, claimed over 25 percent of these sales with a total of 5.62 million cars sold in 2014, an increase of 10 percent over the previous year.

This joint venture will place Alibaba in a group that contains Apple, Google, Baidu and Leshi. They are all looking to enter the connected car market and disrupt the traditional auto industry.

Rumors started circulating last month that Apple Inc. wanted to produce their own electric car by 2020, according to sources familiar with the plans. They have also been quietly building their electric car team and hiring a horde of automotive experts.

Google Inc. is also planning on developing a self-driving car, which they aim to have on the roads in the next five years.

China’s largest Internet search engine, Baidu Inc. also recently announced that they “may introduce an autonomous car this year.”

While another Chinese company, Leshi Internet Information & Technology (Beijing) Co., who currently make web-enabled TV’s, have also said it would invest billions of dollars in developing an electric car.

According to a recent report from BI Intelligence, the research service from Business Insider, the connected car market is growing 10 times faster than the overall car market. BI Intelligence estimates that by 2020, 75 percent of all cars shipped globally will include Internet-connected hardware.

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