Chinese ride-hailing company Didi Global is selling its electric vehicle unit to Xpeng, with the two planning to launch a full-scale brand in 2024.

Chinese ride-hailing company Didi Global is selling its electric vehicle unit to Xpeng, with the two planning to launch a full-scale brand in 2024.

Chinese passenger transportation company Didi Global I agreed to sell it Electric Vehicle (EV) Arming electric car maker Xpeng with HK$5.84 billion (US$744 million) in shares, spinning off a once-promising company now crowded with more than 200 players.

Based in Guangzhou Exping It will issue the shares at HK$64.03 per share to pay for the asset, according to their exchange filings on Monday. Beijing-based Didi, which was fined 8 billion yuan (US$1.1 billion) for data breaches, will own 3.25 percent of Xpeng’s expanded capital.

“The Chinese electric vehicle market has great potential, but now the latecomers have little chance of success due to fierce competition,” said Cao Hua, a partner at Shanghai-based private equity firm Unity Asset Management, which invests in auto supply chain companies. . “The deal enables Xpeng to leverage Didi’s business platforms to promote its vehicles while helping Didi to avoid a harsh market before its designed models enter production.”

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Didi Global headquarters in Beijing, pictured on June 9, 2022. Photo: Bloomberg alt= Didi Global Beijing headquarters, pictured on June 9, 2022. Photo: Bloomberg>

next step Volkswagen Group worth $700 million Investing in Xpeng in July for a stake of 4.99 percent. The two companies plan to introduce two medium-sized electric cars bearing the Volkswagen badge in 2026 on the mainland.

Xpeng jumped 10.9 percent to HK$72.20 in a bull market, with the Hang Seng index posting a 1 percent gain. Didi shares fell 2.2 percent to 3.17 US dollars in off-exchange trading in New York on Friday.

Cheng Wei, Chairman and CEO of DiDi, said in a statement on Monday that DiDi will continue to “deepen our cooperation with Exping in multiple fields, and drive the transformation of the transportation and automobile industries.”

He Xiaopeng, co-founder and CEO of Xpeng, said the electric vehicle startup will explore working with Didi in areas such as marketing, insurance and freight services, robot taxis and international expansion as the two seek a leading position in the future of mobility. .

“The two sides will explore opportunities for cooperation in various fields,” he said in a statement. “Xpeng will continue to create value and seize growth opportunities in the mobility ecosystem as well as in autonomous driving.”

Didi is entitled to increase its stake in Xpeng under the performance-based incentive mechanism, according to exchange filings. Xpeng plans to launch a new brand, Mona, under the partnership with Didi in 2024. Didi will have the right to increase its holdings in the electric car maker if the new brand — targeting the mass-market price segment of 150,000 yuan — meets delivery targets.

At present, Xpeng is building intelligent electric cars that feature first-person driving systems and fast charging technology, which are priced at more than 200,000 yuan.

The China Cyberspace Administration (CAC) investigated Didi between 2021 and 2022, and announced in July last year that the company had committed 16 crimes related to the illegal collection of data from drivers and passengers. A fine was also imposed on the company 8 billion yuan before allowing him to do so Resume new user registrations Its main app will be made available for download again in China in January.

Didi’s car plans can be traced back to 2016 when it created a self-driving unit. The unit became an independent company in 2019, developing self-driving technology with a team of more than 250 engineers.

Xpeng, based in Shanghai New Based in Beijing Lee Auto They are seen as the main competitors of China Tesla.

Xpeng’s G6 SUV, It was launched in JuneIt has limited self-driving capabilities and can navigate the streets of China’s leading cities, such as Beijing and Shanghai, using Xpeng’s X NGP (Navigation Guided Pilot) software, which is similar to Tesla’s Fully Self-Driving (FSD) system. FSD has not been approved by the Chinese authorities.

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