The Chinese carpooling firm Didi is planning to become a strategic shareholder of Xpeng, a Chinese EV startup, and the two companies are looking to collaborate in marketing, charging, robotaxis, international expansion, and other financial and insurance services.
As of Monday morning, shares of a Chinese EV startup rose more than 13% in Hong Kong trading.
Moreover, with the strategic partnership and new assets from Didi, Xpeng said it plans to construct an electric car to launch in the upcoming year under a new automotive market that is estimated to target a price range of 150,000 yuan ($20,580).
However, Xpeng’s cars typically sell for around 200,000 yuan or more. The new brand, developed under the project name “MONA,” is set to be different from that of Xpeng.
The startup’s agreement with Didi comes at a time when many corporations are looking for ways to get a piece of China’s booming but extremely competitive electric car industry.
In late July, Xpeng and the German automobile giant Volkswagen signed an agreement to develop two new electric cars for China under the W brand, which is estimated to launch in 2026.
Under the agreement, Volkswagen is planning to invest about $700 million in the Chinese EV company for a 4.99% stake.
Still working at a loss.
Deals are made now that established auto companies have the funding that new electric car startups don’t have.
Earlier in August, the Chinese EV company reported a second-quarter net loss of 2.8 billion yuan ($384.5 million), which is a wider loss than anticipated by analysts and the biggest quarterly loss since the firm went public three years ago.
However, Xpeng offers some of the most advanced bolstered driving technology available to drivers in China. But the monthly car deliveries of a startup have remained low in comparison to its competitors, including BYD and Li Auto.
The Didi electric car business, held by a subsidiary company called Da Vinci Auto Co., has also suffered substantial losses. According to a Hong Kong stock exchange filing, those for 2022 increased by more than threefold to 2.64 billion yuan from the previous year.
However, as of June 30, the unit had acquired net assets of 937 million yuan.
The filing also stated that those financial results are set to be unified into Xpeng’s financial statements after the first agreement.
The agreement is expected to be completed in multiple stages, with the Chinese carpooling firm being set to receive more shares of the new mass-market car brand, which is expected to do well around a 3.25% stake in Xpeng.
Under the deal, Didi is ineligible to sell its shares for two years after the initial closing of the agreement.
Whereas, the strategic cooperation agreement is set to last for at least 5 years from now.
Also, Didi itself has tried to construct robo-taxis and electric vehicles, despite the business setbacks endured in the previous two years.
Overall, the carpooling giant was delisted from the New York Stock Exchange (NYSE) just months after going public in 2021 and went through a terminated government probe. While the stocks, on the other hand, remain tradeable over-the-counter, we anticipate the Hong Kong listing to remain vague.
- Published By Team Genuine Reporter