Chinese Electric Automaker Xpeng Motors Files for U.S. IPO in Bid to Challenge Tesla

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【Summary】Electric automaker Xpeng Motors is planning to list its shares on the New York Stock Exchange (NYSE), becoming the latest electric vehicle company to launch an IPO in the U.S. to raise new capital to challenge Tesla. Xpeng is hoping to cash in on the current investor trend of pouring money in new electric vehicle startups.

Eric Walz    Sep 15, 2020 10:00 AM PT
Chinese Electric Automaker Xpeng Motors Files for U.S. IPO in Bid to Challenge Tesla
The Xpeng Motors electric P7 Smart Sedan released in April is a formidable challenger to Tesla in China.

Electric vehicle startup Xpeng Motors is planning to list its shares on the New York Stock Exchange (NYSE), becoming the latest electric vehicle maker to launch an IPO in the U.S. to raise new capital to challenge Tesla. Xpeng is hoping to cash in on the current investor trend of pouring money in new electric vehicle startups.

Xpeng's intent to list on the NYSE comes as Tesla's shares have reached record highs over the past three months, making the California electric vehicle pioneer the world's most valuable automaker as its stock topped $1,600 a share. 

Government support for new energy vehicles (NEVs) in China, which have been extended through 2022, has led to a new crop of NEV startups emerging over the past several years to challenge Tesla. Others include U.S. listed NIO and Li Auto, which just raised $1.47 billion in its own U.S. IPO last month.

"The recent rally in Tesla's stock price has encouraged investors in China to continue to put money into this space," said Mingchen Xia, co-head of Hamilton Lane's Asian investments fund investment team to the South China Morning Post.

An pending Xpeng Motors U.S. listing comes two years after rival electric automaker NIO raised over $1 billion in its IPO on Sept, 12, 2018. NIO is one of Xpeng's biggest competitors in China. Shares of NIO have doubled so far this year. 

According to the filing with the U.S. Securities and Exchange Commission on Saturday, Xpeng is selling an unspecified number of Class A ordinary shares and 429,846,136 Class B ordinary shares. Each Class A ordinary share will be entitled to one vote, and each Class B ordinary share will be entitled to 10 votes. 

Investment bankers at Credit Suisse, J.P. Morgan and BofA Securities are serving as underwriters.

Xpeng Motors, founded in 2014, has raised significant new funding since late last year. The EV startup secured $400 million in Series C capital funding in Nov 2019. Early last month, Xpeng secured an additional $500 million in new funding, then followed that up in late July with an additional $300 million round, equaling $1.2 billion raised in less than a year. 

Xpeng's listing on the NYSE comes as relations between the U.S. and China have deteriorated because of trade issues, as well as the Trump administration accusing Chinese firms of stealing IP and collecting data from U.S. citizens. 

However, the U.S. remains the world's largest capital market and still has a far deeper pool of financial liquidity than China for start-ups, according to people familiar with the decision to launch a U.S. IPO,  the South China Morning Post reported

In April, Xpeng Motors began deliveries of its second vehicle in China, the fully-electric flagship P7 sedan. It follows the G3 electric SUV introduced in Dec 2018. 

During the month of July, Xpeng delivered 2,451 electric vehicles, including 1,641 P7 sedans. The company plans to launch its third EV next year, which is a smaller sedan, as well as other new EVs from global automakers soon to be released in China.

Xpeng also intends to challenge Tesla in its home country, which is the world's biggest auto market. In fact, Xpeng was inspired by the success of Tesla, and even studied many of the company's open source patents for developing its advanced electric vehicles.

Xpeng's G3 SUV has also design elements pioneered by Tesla. The compact G3 SUV vehicle includes a panoramic windshield, that extends over the front seats, as well as a large center-mounted touchscreen display, which is similar to the Tesla Model X.


The panoramic windshield of the Xpeng Motors G3 SUV was inspired by Tesla.

The P7, which Xpeng calls a "smart sedan", was built to be a strong competitor to the Tesla Model S and lower-priced Model 3 in China. The fully-electric P7 is loaded with advanced technology. The vehicle achieves an NEDC Range of 439 Miles, the longest of all EVs sold in China. The car features an all-wheel-drive setup with dual electric motors. 

For the P7's batteries, Xpeng partnered with Chinese battery maker Contemporary Amperex Technology Ltd. (CATL) to develop prismatic (pouch cell) lithium nickel manganese cobalt oxide (NCM) battery cells. The P7's ultra-thin battery pack is only 110mm tall, reaching 170Wh/kg energy density while delivering 80kWh of power.

Instead of targeting more affluent consumers, Xpeng is targeting younger, more tech-savvy buyers with its electric offerings. This group represents 30.6% of car buyers in China, according to IHS Markit. This segment also includes consumers that are more likely to purchase a fully-electric vehicle.   

The P7 is less than half the price of a Tesla Model S, an EV which sells at a premium in China. Xpeng says it's offering the same level of technology, connectivity features and performance in the P7 for around $50,000 less than the Model S.

The Tesla Model S starts at 793,000 yuan (US$112,240) in China, while the P7 starts at 240,000 yuan (US$33,931) for the base model and goes up to 370,00 yuan (US$53,210) depending on options. 

The P7 also stands out as one of the first Chinese electric vehicles being built for future autonomous driving. The electric sedan features Nvidia's DRIVE AGX Xavier autonomous driving platform for Xpeng's autonomous driving system it calls XPilot. Nvidia's DRIVE AGX platform is a scable, open platform that serves as the "brains" of a self-driving vehicle. 

The P7 is equipped with 12 ultrasonic sensors, five high-precision millimeter-wave radars, 13 autonomous driving cameras, HD maps with high-precision GPS. Xpeng's XPilot autonomous driving technology will offer hands-free driving as well as self-parking, a popular feature in China. 

"Our visually stunning and technologically groundbreaking models like the P7 demonstrate our determination and commitment to accelerate the development of smart mobility." said He Xiaopeng, Xpeng Motors Chairman & CEO, during the P7's unveiling in April 2019 at Auto Shanghai.

Like Tesla, all of the automaker's autonomous driving development is done entirely in-house, so Xpeng maintains tight control over the entire vehicle development process, including all of its vehicle software and AI-powered infotainment system.

In March, Xpeng was granted permission from the National Highway Traffic Safety Administration (NHTSA) to test its new P7 fully-electric sedan on public roads in the U.S.

Xpeng plans to become one of the leading electric vehicle manufacturers in China and a successful U.S. IPO can lead to a significant influx of new capital.

Xpeng also secured a production licence for its fully-owned factory in May. Xpeng's G3 electric SUV is assembled in the Henan provincial capital of Zhengzhou by its contract manufacturer Haima Automobile, a subsidiary of state-owned carmaker FAW Group.

Xpeng Motors is also backed by Chinese e-commerce giant Alibaba.

resource from: South China Morning Post

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