Beijing, China – In a strategic move to strengthen its position in the rapidly evolving electric vehicle (EV) market, Chinese electric car manufacturer Xpeng announced on Monday its acquisition of Didi’s smart electric car development business. The deal, valued at $744 million and facilitated through an exchange of shares, signifies a significant shift in the Chinese EV landscape.
Under this agreement, the ride-hailing giant Didi will become a strategic shareholder in Xpeng, marking the beginning of a collaborative venture encompassing marketing, financial and insurance services, charging infrastructure, robotaxis, and global expansion initiatives. Both companies issued official statements confirming this alliance.
As a result of this development, Xpeng’s shares surged by over 13% during Hong Kong trading on Monday morning.
With Didi’s resources and expertise now at its disposal, Xpeng is setting its sights on launching an electric car under a new mass-market brand next year, targeting a competitive price range of approximately 150,000 yuan (equivalent to $20,580). This new brand, currently referred to as “MONA,” will stand apart from Xpeng’s existing vehicle offerings.
This strategic maneuver comes as many companies vie for a piece of China’s burgeoning yet fiercely competitive electric car market. Notably, Xpeng had previously entered into a partnership with German automotive behemoth Volkswagen in late July to jointly develop two new electric vehicles carrying the VW brand, slated for release in 2026. This partnership entails an investment of around $700 million by Volkswagen, securing them a 4.99% stake in Xpeng.
However, despite these partnerships and technological advancements, Xpeng reported a substantial second-quarter net loss of 2.8 billion yuan (approximately $384.5 million) earlier this month – a figure exceeding analysts’ expectations and marking the company’s most substantial quarterly loss since going public three years ago.
While Xpeng is renowned for its cutting-edge assisted driving technology, its monthly vehicle deliveries have lagged behind competitors like BYD and Li Auto.
Didi’s electric car business, operated through its subsidiary Da Vinci Auto Co., also struggled to maintain profitability. The unit reported losses in 2022 that more than tripled compared to the previous year, reaching 2.64 billion yuan. As of June 30, the unit possessed net assets totaling 937 million yuan.
Following the completion of the deal, Didi’s financial results from this electric car venture will be incorporated into Xpeng’s financial statements. The deal is structured to unfold in phases, with Didi poised to gain additional shares if Xpeng’s new mass-market car brand performs well, ultimately accumulating a total 3.25% stake in Xpeng.
In accordance with the agreement, Didi is prohibited from selling its shares for a two-year period after the initial closure of the transaction, and the strategic cooperation agreement is slated to extend for a minimum of five years.
This acquisition comes amid Didi’s endeavors to delve into the realms of robotaxis and electric vehicles, following a turbulent period marked by its delisting from the New York Stock Exchange shortly after its 2021 initial public offering and a recent government investigation. Although Didi’s stock remains tradable over-the-counter, plans for a prospective Hong Kong listing remain uncertain.