Xpeng Inc.’s shares soared after it agreed to buy Didi Global Inc.’s smart-car development arm in a deal that both eliminates a potential competitor in the crowded electric-vehicle market and gives it a tech-savvy partner in a new venture.
The HK$5.84 billion ($744 million) all-stock deal will see Didi emerge with a 3.25% stake in Xpeng, according to an exchange filing Monday. Xpeng shares surged more than 16% in Hong Kong trading. XPeng stock jumps 5% in premarket trading.
As part of the deal, Xpeng plans to launch a new EV brand in partnership with Didi in 2024. Dubbed Project “MONA,” the cars will target the mass market segment with a price tag of around 150,000 yuan — or about $20,000. The partnership comes just over a month after Xpeng received a $700 million investment from German auto giant Volkswagen AG to jointly develop EVs for the Chinese market — and should help ease investor concerns about sluggish sales in the face of intensifying competition from the likes of Nio Inc., BYD Co. and Tesla Inc.
Xpeng, which has invested heavily in autonomous driving features, said it would explore collaborations with Didi on fleet management, marketing, insurance, charging facilities, robotaxis and international markets.
For Didi, the deal marks a retreat from the car-making business, once considered a potential driver of growth for the car-hailing company.
Chinese technology leaders, including Didi and Xiaomi Corp., have been trying to inch into the capital-intensive EV boom, with a bet to make the cars more “intelligent” with autonomous driving and other personalized interactive features. Yet the already over-crowded market has made it even tougher for the late-comers to obtain a manufacturing license and gain market share.
