XPeng, a leading electric-vehicle maker, has experienced a significant surge in its shares in Hong Kong following the announcement of a strategic partnership with ride-hailing giant DiDi Global.

Positive Market Response

XPeng’s Hong Kong-listed shares saw a remarkable increase of 14% to reach HK$74.45 (US$9.49), contributing to a year-to-date gain of 94%.

Acquisition and Shares Issuance

In an exchange filing on Monday, XPeng disclosed its plan to acquire Didi’s smart auto development business assets for HK$5.835 billion (US$744 million). As part of the deal, XPeng will issue Class A ordinary shares priced at HK$64.03 per share to Didi. This will represent 3.25% of the company’s outstanding shares.

Accelerating Smart EV Adoption

The collaboration between XPeng and DiDi aims to expedite the widespread adoption of smart electric vehicles (EVs) and related technologies in the mass-market segment. As a result of this partnership, XPeng intends to introduce an A-class smart EV model under a new brand by 2024, which is currently being referred to as “MONA.” Benefitting from DiDi’s access to a nationwide shared mobility market, this new brand will be distinct from XPeng’s existing main brand. The goal is to provide highly popular smart EV models in the RMB150,000 (US$20,575) price range, catering specifically to the mass-market segment.

Expanding Cooperation

XPeng is now the first automotive manufacturing company to receive full support from DiDi’s ecosystem. Both parties are set to explore various areas of collaboration, including marketing, robotaxis, as well as financial and insurance services.

Background: DiDi’s Profile

DiDi Global, headquartered in Beijing, is a prominent ride-hailing giant that acquired Uber’s business in China in 2016. Following Beijing’s intensified scrutiny on the tech sector and concerns about data security, DiDi delisted itself from the New York Stock Exchange in 2021, shortly after its initial public offering.

XPeng’s Financial Results and Market Landscape

XPeng faced challenges in the second quarter, with a net loss of CNY2.8 billion being higher than anticipated. The company has been navigating difficult market conditions, including weak consumption and heightened price competition within China.

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