Start-Up Xpeng Buys Didi Global’s Electric Car Unit

Chinese electric car start-up Xpeng has agreed to buy Didi Global’s EV development operation in a deal that signals a change of direction for Didi and gives Xpeng a valuable partner in new ventures.

The all stock deal gives Didi a 3.25 percent stake in Xpeng worth 5.84 billion Hong Kong dollars ($744m, £591m), according to an exchange filing.

The deal will see Xpeng launch a new EV brand with Didi next year called Project MONA that is to aim at a mass-market user base with a price tag of about 150,000 yuan, or about $20,000, per vehicle.

That is significantly lower than Xpeng’s current vehicles, which are priced mostly at above 200,000 yuan.

EV alliance

The deal comes just over a month after Xpeng announced a $700m investment from Volkswagen to jointly develop EVs for the Chinese market.

“The partnership with Didi will ensure better-than-expected initial scale for the car and achieve a combination of goals in innovation and supply chain management,” Xpeng chief executive He Xiaopeng said in a statement.

He, a former Alibaba executive, said he expected sales of at least 100,000 MONA cars a year.

If the new MONA vehicles reach that target for two consecutive years Didi stands to increase its stake in Xpeng to 5 percent.

Back in business

Industry watchers had previously speculated that the Didi EV development project meant the firm intended to enter manufacturing, a difficult task amidst a crowded market where demand has been falling due to a wider economic slowdown.

Didi is China’s biggest ride-hailing firm, but was forced to delist from the New York Stock Exchange only months after its July 2021 IPO amidst a broad crackdown on tech companies by Chinese regulators.

The Xpeng deal is its first major transaction since Didi’s app reappeared in app stores in January.