Xpeng acquires Didi's smart EV unit

Chinese electric vehicle startup Xpeng said on Monday that it has inked a deal with Didi to purchase the ride-hailing giant's smart EV unit, which would, among other things, give the 9-year-old EV maker access to the vast ride-hailing market.

As part of the deal, the startup will launch a new brand, currently developed under the project name MONA, in 2024, whose models will be priced around 150,000 yuan ($20,565), lower than those under the carmaker's namesake Xpeng marque.

Didi will provide support for the MONA project with "access to its nationwide shared mobility market", said the two companies in a joint statement.

The deal will see Didi acquire about 3.25 percent of the Hong Kong-listed automaker's equity, which could increase depending on whether production and sales targets are fulfilled. Xpeng's shares rose by 10.91 percent on Monday.

The first model, a compact EV, will hit the market in 2024. He Xiaopeng, chairman and CEO of Xpeng, told reporters that he is optimistic about the segment, expecting the model's annual sales to hit at least 100,000 units.

He added that the model will target both individual buyers and companies, with the main goal being to introduce autonomous driving functions into the price range of around 150,000 yuan.

"Smart EV products under the new brand will not only significantly increase our scale, but also accelerate the adoption of our smart EV technologies in the mass market segment, bringing our technologies to a much broader customer base," said He.

Cheng Wei, Didi's chairman and CEO, said the ride-hailing company will deepen its cooperation with Xpeng in multiple areas, "driving transformation of the transportation and automotive industries".

Areas of cooperation may include marketing, financing and insurance services as well as charging, robotaxis and international market expansion, according to the deal.

Roy Lu, a Shanghai-based auto analyst, said the deal is promising. Lu said China's vast ride-sharing market may enable Xpeng to promote autonomous driving and Didi's fleet can facilitate the startup's efforts to accumulate data in the field.

The cooperation between the two also likely signals the end to Didi's ambitions of jumping aboard the smart electric vehicle industry bandwagon.

Google and Apple reportedly plan to produce autonomous vehicles based on their competitive advantages in the e-commerce and consumer electronics markets. Smartphone maker Xiaomi won the nod to build an automotive plant earlier this month.

Chinese media reported last year that Didi was considering entering the auto industry, which involved a model under the project name of da Vinci that was scheduled to be unveiled in June this year.

The deal with Didi is Xpeng's second major agreement in around a month. On July 26, the startup announced that German automotive giant Volkswagen would acquire 4.99 percent of its equity for around $700 million.

The two will work together to roll out two mid-sized new energy vehicles in 2026, according to a joint statement.

The models will bear the Volkswagen brand while utilizing Xpeng's technologies in software and autonomous driving.

Xpeng itself is facing increasing competition in the Chinese EV market. Its sales in July totaled 11,008 units, down 4.5 percent year-on-year, despite a booming domestic EV segment.

Its sales in the first seven months stood at 52,443 units, down 35 percent from the same period last year.