Chinese electric vehicle manufacturer Xpeng has revealed its intention to acquire Didi’s electric car development business in a deal valued at potentially up to $744 million.
This strategic move aims to enhance Xpeng’s production capabilities while reducing costs. As a result of this partnership, Xpeng will become a supplier of electric vehicles to Didi, a prominent ride-hailing company.
In response to this announcement, Xpeng’s shares, despite being one of China’s smaller EV manufacturers currently operating at a loss, surged by 11% during Hong Kong trading. This development closely follows Xpeng’s recent collaboration with Germany’s Volkswagen, involving a stake sale and partnership.
Under the terms of the all-stock agreement with Didi, Xpeng is slated to introduce an A-class model in the upcoming year, debuting under a new brand known as MONA. This project is set to target the 150,000 yuan ($20,000) price range, a significant deviation from Xpeng’s existing offerings which are typically priced above 200,000 yuan.
Xpeng’s CEO, He Xiaopeng, acknowledged the company’s comparative disadvantage as an EV startup in efficiently managing scale and costs within the 150,000 yuan segment, in contrast to established automakers like Volkswagen. He stressed that the collaboration with Didi will facilitate a stronger-than-anticipated initial scale for the vehicle, achieving a balance between innovation and supply chain management. He also expressed confidence in retail sales of the new MONA model, projecting a minimum of 100,000 units sold annually.
The prior speculation surrounding Didi’s EV car development suggested ambitions to enter the manufacturing sector. However, this announcement marks a departure from that trajectory, indicating Didi’s new direction. This deal represents Didi’s first significant transaction since its apps were reinstated on China’s app stores in January, following a regulatory crackdown on its operations.