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Tesla’s China rival Xpeng buys Didi’s smart EV assets for $744M

Xpeng is buying Didi’s smart EV assets for $744 million, marking another major alliance for the Tesla challenger in recent months.

Didi announced on Monday that the two will collaborate to “promote the global application of smart electric vehicles and technologies.”

In 2024, Xpeng will launch a new sub-brand called “Mona” with Didi assets. Marketing, financial insurance, charging, and international expansion are also covered by the partnership.

The news followed Volkswagen’s $700 million investment in Xpeng to produce two new models using XPeng’s ADAS technologies.

Xpeng’s mass market goals
Despite investing heavily in R&D, Xpeng only accounted for 2.1% of China’s new energy vehicle market (including hybrids) in 2022. A partnership with Didi could help it reach hundreds of millions of Chinese users.

Didi had 587 million active users in Q1 2023. Imagine these passengers choosing Xpeng’s Mona model on Didi in the future. In 2018, Didi acquired Brazilian rideshare company 99, expanding its presence in Latin America.

In its filing with Hong Kong’s securities authority, Xpeng stated that the partnership “will increase the Company [Xpeng]’s brand exposure and customer reach through the Seller [Didi]’s platform, which will in turn result in more business leads and unfold business opportunities for the Company in new international markets.”

Didi wants to make cars
Like Uber, Didi has partnered with major automakers. Volvo contracted it to power its robotaxi fleets with autonomous driving technology. Didi lost part of its carmaking dream by selling its smart car business.

The rideshare giant is slowly emerging from regulatory crackdowns. Selling the money-hemorrhaging, assets-heavy EV business to an industry partner makes sense at this point, when its priority is likely to dominate China’s ride-sharing market.

The question is whether Didi and Xpeng will collaborate on autonomous vehicles. The most aggressive EV player in China in software development investment, Xpeng has a large AV team. Despite losing its AV head, part of the business is not slowing down. Didi’s vast driving data could help Xpeng train its autonomous driving algorithms.

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