The smart electric vehicle (EV) division of the world’s largest ride-hailing firm, Didi, will be acquired by the Chinese electric car startup Xpeng (9868. HK), according to the announcement. The two businesses will also establish a strategic alliance.
The price of Xpeng shares increased by almost 13% on Monday.
In accordance with the agreement, Xpeng will introduce an A-class model the following year under a new name—MONA—with the intention of growing in the mass-market segment. The automobile will start at around $20,000.
According to a statement from Xpeng, “Project ‘MONA’ will accelerate the Company’s production and sales growth and help achieve greater economies of scale.”
The agreement comes at a time when China’s electric vehicle EV industry is experiencing declining demand and surplus production capacity, making it challenging for relative newcomers like Didi to get into the market. Two years after originally declaring such plans, smartphone manufacturer Xiaomi (1810.HK) just recently received regulatory approval to produce EVs, according to sources.
Didi stated it will help the launch by “providing access to its mobility market” and the two businesses will explore strategic cooperation in a number of sectors, including marketing, financial services, and insurance services.
Charging, robotaxis, and cooperatively creating a global market are more potential collaboration opportunities. Didi has been developing robotaxis with Chinese automakers with the goal of launching them by 2025.
According to the agreement, Didi will acquire about 3.25% of Xpeng shares, however, this percentage may rise if production and sales goals are met. Potential milestone payments are included in the estimated $744 million deal value maximum.
