Didi launched a free robotaxi service in parts of Shanghai in 2020.
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BEIJING — Chinese electric car company Xpeng said Monday it is buying Didi’s smart electric car development business in an exchange of shares worth $744 million.
The Chinese ride-hailing company will become a strategic shareholder of Xpeng, and the two companies are looking to cooperate in marketing, financial and insurance services, charging, robotaxis and international expansion. That’s according to releases from both companies.
Xpeng shares rose more than 13% in Hong Kong trading as of Monday morning.
With the strategic partnership and new assets from Didi, Xpeng said it plans to develop an electric car for launch next year under a new mass market brand that will target the 150,000 yuan ($20,580) price range.
Xpeng’s cars typically sell for around 200,000 yuan or more. The new brand, developed under the project name “MONA,” is set to be different from that of Xpeng.
The startup’s deal with Didi comes as many companies look for ways to grab a slice of China’s growing but highly competitive electric car market.
In late July, Xpeng and German auto giant Volkswagen signed a deal to develop two new electric cars for China under the VW brand, that’s set to launch in 2026.
Under the agreement, Volkswagen plans to invest about $700 million in Xpeng for a 4.99% stake.
Still operating at a loss
The deals come as traditional auto giants have the cash that electric car startups lack.
Earlier this month, Xpeng reported second-quarter net loss 2.8 billion yuan ($384.5 million) — a wider loss than analysts expected and the biggest quarterly loss since the company went public three years ago.
Xpeng offers some of the most advanced assisted driving technology available to drivers in China. But the startup’s monthly car deliveries have remained low versus competitors’ such as BYD and Li Auto.
The Didi electric car business — held by a subsidiary called Da Vinci Auto Co. — has also racked up losses. The unit had net assets of 937 million yuan as of June 30. Read more about electric cars, batteries, and chips on CNBC Pro
The initial deal will be completed in phases, with Didi receiving more shares if Xpeng, the mass market car brand, does well. This is expected to result in a total 3.25% share in Xpeng. The agreement stipulates that Didi will not be able to sell its shares until two years have passed after the initial deal. The stock is still available for trading over the counter, but plans to list in Hong Kong are unclear.