China’s Didi is selling its smart EV business to Xpeng for $744Mn

In a significant development within the Chinese electric vehicle (EV) landscape, Xpeng Motors, a prominent EV startup, has decided to acquire the smart EV development business of Didi Global. As part of the deal, Xpeng will issue around 3.25% of its shares to Didi at HK$64.03 per share, establishing the ride-hailing giant as a strategic shareholder, according to a stock exchange filing.

The Guangzhou-based Xpeng is set to acquire the business for a total of HK$5.84 billion ($744 million) from Didi. With this deal, it is poised to introduce a new A-class model under a new brand, currently called “MONA,” in 2024. The brand in question is set to target a wider consumer base within the competitive price range of 150,000 yuan ($20,000).

Apart from the share sale, “performance-based incentive mechanisms” will enable Didi to increase its stake in Xpeng as well. This development comes soon after Xpeng secured strong endorsement last month – at that time, German automaker Volkswagen secured a stake of 5% in the EV startup for a total of $700 million.

The development ensured that Xpeng’s shares rose by around 15% in early Monday trade, taking the amount to $17.53 per share. “As a world’s leading mobility technology platform, DiDi shares Xpeng’s vision of shaping the mobility experience of the future with technology. Xpeng’s A-class Smart EV products under the new brand will not only significantly increase our scale, but also accelerate the adoption of our Smart EV technologies in the mass market segment, bringing our technologies to a much broader customer base,” He Xiaopeng, Chairman and CEO of Xpeng, commented on the matter.

This is not the first time Xpeng and Didi have joined forces. In 2020, Xpeng established a strategic alliance with Xiaoju Car Service, Didi’s subsidiary specializing in car rental and maintenance. The two companies collaborated on charging network integration and co-developed charging stations. This pre-existing relationship has laid the foundation for deeper collaboration.

This time, beyond EV manufacturing, Xpeng and Didi are set to explore various areas of strategic cooperation. This encompasses marketing, financial and insurance services, charging infrastructure, and even the global expansion of their mobility offerings. The deal between Xpeng and Didi is set to make the latter the first automotive manufacturing company that has the support from Didi’s ecosystem. By tapping into Didi’s mobility ecosystem, Xpeng aims to amplify its reach and impact, and it remains to be seen whether this can enable the creation of a holistic mobility ecosystem in the Chinese EV space.