China’s Xpeng to acquire Didi’s EV unit in deal worth up to $744 mln

HONG KONG, Aug 28 (Reuters) – Chinese EV maker Xpeng (9868.HK) stated it might purchase Didi’s electrical automotive construction trade – a deal worth up to $744 million that can see it provide cars to the ride-hailing massive, boosting manufacturing and reducing prices.

Shares in Xpeng, one among China’s smaller electrical automobile producers and recently loss-making, shot up 11% in Hong Kong industry at the news which comes at the heels of a stake sale to and partnership with Germany’s Volkswagen (VOWG_p.DE).

The all-stock deal with Didi requires Xpeng to release an A-class type subsequent 12 months below a brand new emblem, in a undertaking known as MONA, which might be priced in the 150,000 yuan ($20,000) value tier. Xpeng’s present choices are most commonly priced above 200,000 yuan.

“As an EV startup, we are not as skilled as established automakers like Volkswagen in terms of scale and cost management in the 150,000 yuan segment…the partnership with Didi will ensure better-than-expected initial scale for the car and achieve a combination of goals in innovation and supply chain management,” Xpeng Chief Executive He Xiaopeng informed Chinese media, in accordance to a company-provided transcript.

He added that the auto would even be offered to retail consumers and he expects gross sales of no less than 100,000 MONA vehicles a 12 months.

Didi’s construction of an EV automotive had invited hypothesis that it had ambitions to shift into production, however the announcement – Didi’s first primary transaction since its apps had been restored to China app shops in January after a regulatory crackdown on its trade – suggests the corporate is transferring in any other course.

Slower call for and extra production capability in China’s EV {industry} have intensified pageant and made it onerous for relative learners similar to Didi to input the marketplace. Smartphone maker Xiaomi (1810.HK) handiest just lately received a regulatory nod to manufacture EVs – two years after first saying such plans, resources have stated.

Didi’s resolution to spouse with Xpeng over different EV makers most probably marked popularity of Xpeng’s generation and the deal will receive advantages Xpeng because the sedan Didi has evolved can be appropriate for promoting to different companies, stated Yale Zhang, managing director at Shanghai-based consultancy Automotive Foresight.

“It looks like a very good strategic move,” he stated.

Under the deal, Didi will acquire round 3.25% of Xpeng, with the EV maker issuing stocks at HK$64.03 every, worth $474 million in overall. The be offering value represents a 1.7% bargain to its final value on Friday.

If automobile supply goals are fulfilled, Didi’s stake may just climb to 5.26% for a deal worth of up to $744 million.

Didi stated the 2 corporations will discover strategic cooperation in numerous spaces, together with advertising, monetary and insurance coverage products and services.

Other conceivable spaces of cooperation come with charging, robotaxis and collectively growing a world marketplace. Didi has been running with Chinese carmakers to broaden robotaxis which it goals to put in provider by means of 2025.

Xpeng , which may be indexed in New York, has been grappling with increasing losses and slumping gross sales amid an industry-wide price cutting war began by means of Tesla (TSLA.O) in January. Its U.S.-listed stocks had been up 8% in pre-market industry.

CEO He stated in April that he anticipated to see handiest 8 automakers live on in the Chinese auto marketplace – the arena’s greatest – by means of 2030. That compares with 65 auto producers recently.

XPeng offered some 41,000 EVs in the primary part, accounting for almost 2% of battery automobile gross sales in China. By comparability, competitors BYD (002594.SZ) and Tesla offered 550,000 and 294,000 EVs respectively.

Xpeng stated the brand new mass-market emblem it aimed to introduce the usage of the MONA platform would start mass manufacturing in the second one part of 2024.

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