Tesla’s China Rival, Xpeng Acquires Ride Hailing Giant, Didi’s Smart EV Assets For $744M

Chinese electric vehicle startup Xpeng has made a significant move by acquiring Didi’s smart EV assets for $744 million, showcasing another important partnership for the Tesla competitor. This strategic move was announced on Monday, with Didi and Xpeng collaborating to advance the global implementation of smart electric vehicles and related technologies.

One noteworthy aspect of this deal is that the acquired assets from Didi will create a new sub-brand called “Mona” under Xpeng, with plans for a launch in 2024. This partnership also encompasses various areas such as marketing, financial insurance services, charging infrastructure, and international expansion.

This development comes shortly after Volkswagen’s $700 million investment in Xpeng, which involves the production of two new vehicle models under the Volkswagen brand incorporating Xpeng’s key Advanced Driver Assistance Systems (ADAS) technologies.

Xpeng, despite significant research and development expenditures, has thus far achieved only a modest market share in China’s electric vehicle sector, constituting just 2.1% of the country’s new energy vehicle market (including hybrids) in 2022. The collaboration with Didi has the potential to provide access to Didi’s vast user base, numbering 587 million active users for the 12 months up to Q1 2023. This arrangement could result in Xpeng’s Mona model being showcased as a preferred option when users choose their rides on Didi’s platform. Moreover, Didi’s operations extend beyond China, courtesy of its acquisition of the Brazilian rideshare firm 99 in 2018, granting it a foothold in the Latin American market.

Xpeng has acknowledged in its filing with Hong Kong’s securities authority that this partnership is anticipated to heighten the company’s brand exposure and customer reach via Didi’s platform. Consequently, this is expected to generate more business opportunities and leads for Xpeng in new international markets.

Didi, much like Uber, has formed partnerships with major automotive Original Equipment Manufacturers (OEMs) over the years. One such partnership involved Volvo, where Didi supplied autonomous driving technology to fuel robotaxi fleets produced by Volvo. The divestiture of its smart car business signifies Didi relinquishing part of its aspirations in the realm of car manufacturing.

Didi has been gradually recovering from a series of regulatory challenges. In its current phase, as it focuses on consolidating its position in China’s ride-sharing sector, selling its resource-intensive and loss-generating electric vehicle business to an industry collaborator appears to be a strategic move.

An outstanding question is whether Didi and Xpeng will synergize their efforts in the autonomous vehicle field. Xpeng has a substantial autonomous vehicle team and has been a trailblazer in China’s electric vehicle market in terms of software development investment. Despite the recent departure of its Head of Autonomous Vehicles, the momentum in this aspect of Xpeng’s business continues. The extensive driving data amassed through Didi’s platform could prove invaluable to Xpeng’s efforts in training its autonomous driving algorithms.