China’s Xpeng, a prominent electric car manufacturer, has announced its intention to acquire Didi’s smart electric vehicle (EV) unit in a substantial deal valued at up to USD 744 million. The collaboration will extend to a strategic partnership between the two companies.
Xpeng’s shares witnessed an impressive surge of around 13% during Monday’s trading session.
New A-Class Model and Brand
As a significant aspect of the agreement, Xpeng is set to introduce an A-class model under a new brand, tentatively named MONA, in the coming year. The company’s aim is to penetrate the mass-market segment with this vehicle, which will be priced within the $20,000 range.
Strengthening Production and Sales Growth
Xpeng asserts that the introduction of the “MONA” project will play a pivotal role in amplifying its production and sales growth trajectory, while simultaneously facilitating the achievement of substantial economies of scale.
Addressing Industry Challenges
This acquisition takes place in the backdrop of a sluggish demand landscape and excessive manufacturing capacity within China’s EV sector. These challenges have posed barriers for new entrants like Didi to establish their presence in the market. Xiaomi, a smartphone manufacturer, managed to secure regulatory approval for EV production only recently, a significant two years after initially disclosing their plans, as per sources familiar with the matter.
Cooperation and Shared Goals
Didi has expressed its commitment to supporting the launch of the MONA project by granting access to its mobility market. The two entities are set to explore collaboration avenues in diverse domains such as marketing, financial services, and insurance. Furthermore, potential cooperative efforts in areas such as charging infrastructure, robotaxis, and international market expansion are also being explored. Didi’s ambition to deploy robotaxis in service by 2025 is well-aligned with these endeavors.
Equity Stakes and Deal Dynamics
Within this acquisition, Didi is expected to secure approximately 3.25% of Xpeng’s shares, and this stake could increase based on the fulfillment of production and sales targets. The comprehensive deal’s upper estimated value of USD 744 million encompasses potential milestone-based payments.