Xpeng partners with Didi on affordable AD plans

China EV pure play Xpeng has sealed a strategic partnership with Didi, the country’s leading mobility platform, as it develops a new brand aimed at bringing advanced driver-assistance systems and autonomous driving (AD) to the RMB150,000 ($20,800) market. And its new partner’s global reach could be a significant boon to Xpeng international ambitions.

Xpeng plans to launch the new EV brand in 2024, and the project is currently named Mona. An A-class smart EV will be launched next year as its debut product, as flagged earlier in the month by Xpeng CEO He Xiaopeng. Didi will provide support to the new brand from its ecosystem, given it access to its nationwide shared mobility market.

Xpeng will issue new shares, representing c.3.25pc of the company's outstanding share capital upon completion of the issuance, to acquire assets related to Didi's existing smart EV project. The ride-hailing heavyweight will not be able to sell the shares but will instead become a strategic shareholder in Xpeng for at least the next two years.

The agreement also establishes performance-based incentive mechanisms based on Mona mass production and sales volume targets to be fulfilled by Didi. Subject to these, Didi will be entitled to receive further share-based incentives.

Going global

Both parties “will explore strategic cooperation in a number of areas, including marketing, financial and insurance services, charging, robotaxi and international market expansion”. Didi has a strong position in certain emerging markets, Latin America in particular, that could have significant demand for an affordable EV and fewer barriers to entry for a Chinese automaker than the US or Europe.

The firm also holds a stake in dominant Southeast Asian ride-hailing service Grab. And Japanese investor Softbank has in its portfolio not just in Didi and Grab but also India’s Ola — as well as AD firms such as Aurora, Cruise and Robotic Research — potentially giving Xpeng an even wider global network into which to plug.

“Didi shares Xpeng’s vision of shaping the mobility experience of the future with technology,” says He. “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.”