Chinese electric car manufacturer Xpeng has announced plans to acquire Didi’s smart electric car development business in a deal valued at $744 million. This exchange of shares will make Didi a strategic shareholder in Xpeng, paving the way for collaboration in various areas, including marketing, financial services, charging infrastructure, and international expansion.
As part of this strategic partnership, Xpeng intends to create a new mass-market electric car brand named “MONA,” targeting a price range of 150,000 yuan ($20,580). This move aligns with Xpeng’s aim to tap into China’s rapidly growing electric vehicle market and offer more affordable options to consumers.
Xpeng’s partnership with Didi follows a recent agreement with Volkswagen to jointly develop electric cars for the Chinese market. However, despite these collaborations, Xpeng reported a significant second-quarter net loss of 2.8 billion yuan ($384.5 million), highlighting the financial challenges that electric vehicle startups are facing in the competitive market.
Didi, the ride-hailing giant, has faced its own challenges, including being delisted from the New York Stock Exchange after a government probe. The company’s foray into electric vehicles and its partnership with Xpeng signal its efforts to diversify and innovate in the face of industry disruptions.
The deal is subject to completion in stages, with Didi potentially receiving more shares based on the performance of the new mass-market car brand. The strategic cooperation agreement between the two companies is set to last for at least five years.
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