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Xpeng to Acquire Didi's Electric Car Business in $744 Million Deal
Chinese Electric Vehicle Manufacturer Xpeng is set to purchase Didi's electric car development arm in a deal worth up to $744 million.
This strategic move will involve supplying electric vehicles to the ride-hailing giant, potentially boosting production and reducing expenses.
Shares in Xpeng, a smaller player in China's electric vehicle sector currently facing losses, surged by 11% during Hong Kong trading after this announcement. This development closely follows a recent stake sale and partnership with Germany's Volkswagen. The agreement entails Xpeng introducing an A-class model, codenamed MONA, within a year under a new brand. This vehicle will be priced at around 150,000 yuan ($20,000), filling a crucial price tier gap. Xpeng's current offerings generally exceed 200,000 yuan.
Xpeng CEO He Xiaopeng acknowledged the challenge of competing with established automakers like Volkswagen in the lower price segment. He emphasised that the collaboration with Didi would enhance initial scale and enable innovation and supply chain management.
He Xiaopeng stated that the MONA car will also be available for retail customers, with a projected annual sales target of at least 100,000 units. Previously, Didi's venture into electric vehicle development triggered speculation about its manufacturing ambitions. However, this partnership marks Didi's shift in focus. This comes after a regulatory crackdown and the restoration of its apps to China's app stores.
Challenges in China's EV industry, including slower demand and excess manufacturing capacity, have made it difficult for newcomers like Didi to establish a foothold. Didi's choice to collaborate with Xpeng signifies recognition of the latter's technological prowess. Didi will acquire approximately 3.25% of Xpeng, issuing shares at HK$64.03 each, amounting to $474 million. This price represents a 1.7% discount to Friday's closing price. If delivery targets are met, Didi's stake could rise to 5.26%, reaching a total deal value of $744 million.
The partnership between Xpeng and Didi will explore various cooperative efforts, including marketing, financial services and insurance. The potential areas of collaboration extend to charging infrastructure, robotaxis and international market expansion. Didi aims to introduce robotaxis into service by 2025.
Xpeng, also listed in New York, is contending with mounting losses and declining sales amid a price war initiated by Tesla. CEO He envisions a future with only eight surviving automakers in China's massive auto market by 2030, down from the current 65 manufacturers.
Xpeng acquires Didi's electric car development business for up to $744 million.
The deal involves Xpeng supplying electric vehicles to Didi.
Xpeng's shares surged by 11% following the announcement.
Source: REUTERS