Chinese EV maker XPeng (XPEV) announced Monday it plans to buy out Didi Global’s Smart electric car division. XPeng revealed the partners will launch a new mass-market EV brand next year with a starting price of around 150,000 RMB (roughly $20,500).
XPeng to launch new affordable EV brand
According to the new agreement, XPeng will become the first automaker with support from Didi’s ecosystem.
The Chinese EV maker said it will buy Didi’s Smart EV development project in an all-stock deal worth around $744 million. Didi will become a strategic shareholder, while the two companies will collaborate on a new EV brand.
XPeng will use the tech to launch the new affordable EV brand next year, being developed under the project name “Mona.”
The company will use the new brand to expand its presence in the mass market segment with a starting price of RMB 150,000 ($20,500). XPeng typically sells premium EVs, so “MONA” is designed to accelerate production and sales growth.
CEO of XPeng, Mr He Xiaopeng, praised the new partnership, saying:
XPENG’s A-class 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.
A new A-class Smart EV will be launched next year as the brand’s debut product. XPeng says the new model and “MONA” brand will be separate from its core products.
Meanwhile, Didi will provide support from its mobility ecosystem to help advance the project, paving the way for Smart EV models for the mass market segment. Both companies will collaborate on marketing, financials, insurance, charging, Robotaxi, and international expansion.
Didi is one of the world’s largest ride-hailing companies (often compared to Uber), asserting its dominance in China with around 70% of the market. At the end of March, Didi had 45 million average daily transactions.
After becoming an early adopter, the ride-share giant claimed to be the “world’s largest EV fleet operator” in 2019.
The company has committed to accelerating the adoption and sharing of intelligent electric vehicles. Didi’s app was restored in China in January after being removed in July 2021 over cybersecurity concerns as speculation grows it’s moving in a new direction.
XPeng’s stock is trading up 3% in Monday’s trading session following the news.
City Dwellers’s Take
The deal seems like a win-win for both companies. XPeng will expand into the mass market, an affordable segment with a new brand and one less competitor.
Meanwhile, Didi’s move to sell off its assets may signal it’s moving in a new direction. The partnership comes as China’s EV market is heating up, with low-cost competitors like BYD gaining market share.
XPeng’s deal comes days after photos of NIO’s new “Alps” mass market EV brand emerged. NIO’s new brand will compete with legacy automakers like Toyota and Volkswagen in the $30,000 to $50,000 price range.
XPeng looks to be taking a similar route as NIO with a differentiated brand to enter the mass-market segment.
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