On Monday, Chinese electric car company Xpeng announced it was striking a share exchange agreement with Didi worth $744 million in order to get its hands on Didi's smart electric car development business. Xpeng expressed that it will use the newly obtained assets from Didi to produce a new electric car that will be released during the course of the upcoming year. Didi has gone through some blows to its business in the last two years as it attempted to create robotaxis and EVs.
On Monday, Chinese electric car company Xpeng announced an exchange of shares worth $744 million to purchase Didi's smart electric car development business. As a result, the Chinese ride-hailing company will become a strategic shareholder of Xpeng, and the companies have expressed an intention to cooperate in various areas such as marketing, financial and insurance services, charging, robotaxis, and global expansion. The news caused Xpeng's Hong Kong share prices to climb by over 13% Monday morning.
Xpeng announced that, with the help of Didi's strategic partnership and resources, they are working on a new electric car to launch in the next year. This car is planned to be a mass market brand, with prices in the 150,000 yuan ($20,580) range, which is lower than the usual cost of Xpeng's cars, being around 200,000 yuan. The new brand, which is referred to as project “MONA”, will be separate from Xpeng.
As firms seek out means to acquire a large share of China's thriving and intensely competitive electric car sector, the startup finalized a deal with Didi.Towards the end of July, Xpeng and German vehicle manufacturer Volkswagen joined forces in order to construct two electric cars for China's market, with a launch slated for 2026.In relation to this, VW agreed to invest close to $700 million into Xpeng for a 4.99% stake.
Traditional automakers have financial resources that electric car startups lack, which has driven recent deals. Xpeng reported a net loss of 2.8 billion yuan ($384.5 million) for the second quarter - a wider loss than analysts anticipated and the company's largest quarterly loss since its 3-year-old public listing. Xpeng provides some of the most advanced assisted driving features in China, yet its monthly car deliveries remain low in comparison to those of BYD and Li Auto. Da Vinci Auto Co., a subsidiary of Didi, has also suffered significant losses - 2.64 billion yuan in 2022, a more than triple increase from the prior year. As of June 30th, the unit reported net assets of 937 million yuan. According to a Hong Kong stock exchange filing, these financial outcomes will be included in Xpeng's financial statements after the initial agreement.
CNBC Pro provides information on Electric Vehicles (EVs), batteries, and chips. It has been reported that the chip wars are intensifying and a Chinese stock rose 30% in five days. Moreover, Tesla's advancement with humanoid robots is anticipated to be beneficial to five stocks in the supply chain, as stated by HSBC. As investors turn to EVs, analysis shows that auto stocks may soar.
Competition among chip makers is intensifying. In the past five days, a Chinese stock has seen a 30% uptick, and Tesla's venture into developing humanlike robots is likely to be a boon to five particular equities in the supply chain, according to HSBC. With investors turning their attention to electric cars, analysts are predicting gains for a selection of automakers.
The agreement between Didi and Xpeng is expected to be implemented in stages such that Didi will receive more shares if the mass market car brand performs well, amounting to a 3.25% stake total. Didi has been obligated to not resell the shares for two years after the closing of the transaction. Moreover, the strategic cooperation will remain in effect for at least five years. In the past two years, Didi has been actively attempting to create electric vehicles and driverless taxis, despite encountering adverse business events. After the New York Stock Exchange listing in 2021, the tech giant was de-listed and participated in a now-concluded government investigation. Although the stock is still available in the OTC market, no official plans to re-list on the Hong Kong Stock Exchange have been declared. John Rosevear and Arjun Kharpal from CNBC have contributed to this report.
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