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XPeng (XPEV) Partners With DiDi to Expand in Smart EV Segment
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XPeng Inc. (XPEV - Free Report) announced a strategic partnership with DiDi Global Inc. (DIDIY - Free Report) to accelerate the adoption of Smart EVs and technologies. The company aims to launch an all-new electric vehicle (EV) brand in 2024, which is currently being developed under the project “MONA”.
The RMB150,000 price range is a mass market segment with immense potential. XPeng plans to leverage new brand to expand in the mass market segment. MONA will accelerate XPeng’s production and top-line growth and help it to achieve desired economies of scale.
In 2024, XPeng will launch an A-class Smart EV model. The model will be a debut product of the company's new brand. The A-class Smart EV model will be differentiated from XPeng-branded products and the main brand.
Project MONA will be supported by DiDi from its mobility ecosystem. Through this partnership, the company will build highly popular Smart EV models for RMB150,000 price range.
The company will issue Class A ordinary shares that represent approximately 3.25% of its outstanding share capital to acquire assets related to DiDi’s Smart EV project worth $744 million. As a result, DiDi will become a strategic shareholder of XPeng, with a lock-up period of 24 months after the initial closing.
Moreover, the deal establishes performance-based incentive mechanisms based on the mass production of MONA and sales volume targets to be fulfilled by DiDi. If DiDi meets the target it will be entitled to receive share-based incentives.
Per the agreement, XPeng will become the first automaker with comprehensive support from DiDi’s ecosystem. Both companies will explore strategic cooperation in different areas, including marketing, financial and insurance services, charging, Robotaxi and international market expansion.
Mr. He Xiaopeng, Chairman and CEO of XPENG, said that DiDi shares XPENG’s vision of shaping the mobility experience of the future with technology. The A-class Smart EV products under the new brand will not only increase company’s scale, but also accelerate the adoption of Smart EV technologies in the mass market segment, taking XPeng’s technologies to a much broader customer base.
Despite high R&D spend, XPeng’s EV adoption remained limited in 2022. The agreement with DiDi may help the company tap hundreds of millions of users in China. Didi recorded 587 million active users for the 12 months ended in first-quarter 2023.
The Zacks Consensus Estimate for ALSN’s 2023 sales and earnings indicates a year-over-year increase of 9.4% and 25.3%, respectively. The EPS estimate for 2023 has moved up by 34 cents in the past 30 days. The 2024 EPS estimate has moved north by 37 cents in the past 30 days.
The Zacks Consensus Estimate for GNTX’s 2023 sales and earnings suggests year-over-year growth of 17.3% and 29.4%, respectively. The EPS estimate for 2023 has moved up by 7 cents in the past 30 days. The 2024 EPS estimate has moved north by 9 cents in the past 30 days.
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XPeng (XPEV) Partners With DiDi to Expand in Smart EV Segment
XPeng Inc. (XPEV - Free Report) announced a strategic partnership with DiDi Global Inc. (DIDIY - Free Report) to accelerate the adoption of Smart EVs and technologies. The company aims to launch an all-new electric vehicle (EV) brand in 2024, which is currently being developed under the project “MONA”.
The RMB150,000 price range is a mass market segment with immense potential. XPeng plans to leverage new brand to expand in the mass market segment. MONA will accelerate XPeng’s production and top-line growth and help it to achieve desired economies of scale.
In 2024, XPeng will launch an A-class Smart EV model. The model will be a debut product of the company's new brand. The A-class Smart EV model will be differentiated from XPeng-branded products and the main brand.
Project MONA will be supported by DiDi from its mobility ecosystem. Through this partnership, the company will build highly popular Smart EV models for RMB150,000 price range.
The company will issue Class A ordinary shares that represent approximately 3.25% of its outstanding share capital to acquire assets related to DiDi’s Smart EV project worth $744 million. As a result, DiDi will become a strategic shareholder of XPeng, with a lock-up period of 24 months after the initial closing.
Moreover, the deal establishes performance-based incentive mechanisms based on the mass production of MONA and sales volume targets to be fulfilled by DiDi. If DiDi meets the target it will be entitled to receive share-based incentives.
Per the agreement, XPeng will become the first automaker with comprehensive support from DiDi’s ecosystem. Both companies will explore strategic cooperation in different areas, including marketing, financial and insurance services, charging, Robotaxi and international market expansion.
Mr. He Xiaopeng, Chairman and CEO of XPENG, said that DiDi shares XPENG’s vision of shaping the mobility experience of the future with technology. The A-class Smart EV products under the new brand will not only increase company’s scale, but also accelerate the adoption of Smart EV technologies in the mass market segment, taking XPeng’s technologies to a much broader customer base.
Despite high R&D spend, XPeng’s EV adoption remained limited in 2022. The agreement with DiDi may help the company tap hundreds of millions of users in China. Didi recorded 587 million active users for the 12 months ended in first-quarter 2023.
Zacks Rank & Key Picks
XPEV currently carries a Zacks Rank #3 (Hold).
Some better-ranked players in the auto space are Allison Transmission Holdings, Inc. (ALSN - Free Report) and Gentex Corporation (GNTX - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for ALSN’s 2023 sales and earnings indicates a year-over-year increase of 9.4% and 25.3%, respectively. The EPS estimate for 2023 has moved up by 34 cents in the past 30 days. The 2024 EPS estimate has moved north by 37 cents in the past 30 days.
The Zacks Consensus Estimate for GNTX’s 2023 sales and earnings suggests year-over-year growth of 17.3% and 29.4%, respectively. The EPS estimate for 2023 has moved up by 7 cents in the past 30 days. The 2024 EPS estimate has moved north by 9 cents in the past 30 days.