Didi introduced a free Robotaxi service in parts of Shanghai in 2020.
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BEIJING — Chinese electric car maker Xpeng announced Monday that it is buying Didi’s smart electric car development business in a $744 million stock swap.
The Chinese ride-hailing company becomes a strategic shareholder of Xpeng, and the two companies aim to collaborate on marketing, financial and insurance services, charging, robotic taxis and international expansion. This emerges from announcements by both companies.
Xpeng shares rose more than 13% in Hong Kong trading on Monday morning.
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With Didi’s strategic partnership and new assets, Xpeng plans to develop an electric car to launch next year under a new mass-market brand, targeting the price range of 150,000 yuan (US$20,580).
Xpeng’s cars usually sell for around 200,000 yuan or more. The new brand, which is being developed under the project name “MONA”, is said to be different from that of Xpeng.
The startup’s deal with Didi comes as many companies look for ways to capture a slice of China’s growing but highly competitive electric car market.
In late July, Xpeng and German auto giant Volkswagen signed a deal to develop two new electric cars for China under the VW brand, to be launched in 2026.
As part of the agreement, Volkswagen plans to invest approximately $700 million in Xpeng, earning a 4.99% stake.
Still working at a loss
The deals come as traditional auto giants have the cash that electric car startups lack.
Earlier this month, Xpeng reported a net loss of 2.8 billion yuan ($384.5 million) for the second quarter — a bigger loss than analysts had expected and the biggest quarterly loss since the company went public three years ago.
Xpeng offers some of the most advanced driver assistance technologies available to drivers in China. But the startup’s monthly car deliveries remain small compared to those of rivals like BYD and Li Auto.
Electric car business Didi, held by a subsidiary called Da Vinci Auto Co., has also made losses. These for 2022 have more than tripled to 2.64 billion yuan from the previous year, according to a stock market report from the Hong Kong Stock Exchange. The entity had net assets of 937 million yuan as of June 30.
Those financial results are expected to be consolidated in Xpeng’s financial reports after the initial deal, the filing said.
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The deal is expected to be completed in stages, with Didi receiving more shares if the new mass-market car brand performs well and is expected to own a total of 3.25% stake in Xpeng.
According to the agreement, Didi will not be able to sell the shares for two years after the initial signing of the contract.
The strategic cooperation agreement has a term of at least five years.
Didi himself, despite business setbacks, has been trying to develop robotic taxis and electric vehicles for the past two years.
The ride-hailing giant was delisted from the New York Stock Exchange just months after its IPO in 2021, undergoing a now-completed government investigation. While the stock remains OTC, plans for an expected Hong Kong listing remain unclear.
— CNBC’s John Rosevear and Arjun Kharpal contributed to this report.