Xpeng expands its product portfolio with a new brand
Chinese electric car company Xpeng announced on Monday that it will acquire Didi’s smart electric vehicle (EV) unit and the two companies will form a strategic partnership. Xpeng’s shares surged around 13% in Monday trade.
As part of the deal, which could be worth as much as $744 million, Xpeng will launch an A-class model next year under a new brand, currently called MONA, aiming to expand in the mass-market segment with the car to be priced in the $20,000 price tier.
“Project ‘MONA’ will accelerate the Company’s production and sales growth and help achieve greater economies of scale,” Xpeng said in a statement.
Didi supports Xpeng with its mobility market and services
Didi, the ride-hailing giant, will support the launch by “providing access to its mobility market” and the two companies will explore strategic cooperation in a number of areas, including marketing, financial and insurance services.
Didi will also acquire around 3.25% of Xpeng shares under the deal, which could increase depending on whether production and sales targets are fulfilled. The likely maximum deal value of $744 million includes potential milestone payments.
The deal comes amid slowing demand and excess capacity in China’s EV industry
The deal comes amid slowing demand and excess capacity in China’s EV industry that has made it hard for relative newcomers such as Didi to enter the market. Smartphone maker Xiaomi only recently won a regulatory nod to manufacture EVs – two years after first announcing such plans, sources have said.
Didi has been working with Chinese carmakers to develop robotaxis which it aims to put in service by 2025. Xpeng has also been investing in autonomous driving technology and has launched its own robotaxi service in Guangzhou.
The deal is expected to give both companies a competitive edge in the fast-growing EV market, which is dominated by Tesla and local rivals such as Nio and Li Auto.