China's Xpeng Motors is Aiming to Raise $1.1 Billion in its U.S. IPO

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【Summary】The latest U.S. IPO for an electric automaker is coming from one of China’s rising electric vehicle startups Xpeng Motors. The company announced today that it plans to raise up to $1.11 billion in its upcoming debut on Wall Street.

Eric Walz    Sep 27, 2020 3:30 PM PT
China's Xpeng Motors is Aiming to Raise $1.1 Billion in its U.S. IPO
The Xpeng Motors P7 smart sedan is a strong competitor to the Tesla Model S in China

While U.S. electric automaker Tesla's stock price soars to record highs, investors are pouring money into electric vehicle startups. Over the past few months, several high-profile EV startups have entered into reverse merger deals with blank check companies as a way to raise capital on Wall Street. 

Among the other new publicly traded EV startups are Nikola Motor, Lordstown Motors, and Chinese New Energy Vehicle (NEV) startups Li Auto and NIO Inc.

Now the latest IPO for an electric carmaker is coming from one of China's rising electric vehicle startups Xpeng Motors. The company announced today that it plans to raise up to $1.11 billion in its upcoming U.S. IPO.

Xpeng Motors said on Friday it intends to sell 85 million shares American depositary shares (ADS), each representing two class A ordinary shares, priced between $11 and $13 per share.

At the high end of the range, XPeng's valuation stands at $9.17 billion.

BofA Securities, JP Morgan and Credit Suisse are among the underwriters for the IPO.

Xpeng Motors said existing investors Alibaba Group, Coatue, and Qatar Investment Authority had indicated interest in buying up to $200 million, $100 million and $50 million, respectively, of the ADSs being offered.  

Alibaba Group will own all of XPeng's class C ordinary shares, representing 14.9% of the voting power immediately after the completion of the offering, Xpeng said.

Another major Xpeng Motors backer Xiaomi Corp also indicated interest in buying up to $50 million of the ADSs, Reuters reports.

The Xpeng Motors IPO is the third for a China-based electric car company. Xpeng rival NIO, raised over $1 billion in its debut on Wall street in Sept 2018. While Beijing-based automaker Li Auto raised $1.47 Billion in its U.S. IPO last month.

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.

"Investors can't seem to get enough exposure to electric vehicle stocks. We are comparing Xpeng with Li Auto, which went public in July and is up 28% from its IPO and to Nio," Kathleen Smith, Principal, Renaissance Capital, provider of institutional research and IPO ETFs, said to Reuters.

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 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 $2,000 a share this week. Tesla's recent stock surge has increased Tesla's market cap to $382 billion. 

Xpeng is also one of Tesla's biggest rivals in China. Instead of targeting more affluent consumers, Xpeng is targeting younger, more tech-savvy buyers with its electric vehicles. 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 automaker's first model is the fully-electric G3 SUV, which launched in Dec 2018. The G3 SUV is available in two versions, the longer-range G3 520 and the G3 400. The G3 520 version boasts the furthest range of any compact EV SUV in its class, according to Xpeng. The G3 achieves a 249 mile (401 km) NEDC range. The G3 520 includes enhanced supercharging capacity, enabling the battery to reach a 80% charge in just 30 minutes.

Xpeng's second electric model is the P7 smart sedan and it comes loaded with advanced technology. The P7 went on sale in April in China

The P7 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 and is billed as a lower priced alternative to the Tesla Model S in China. 

The P7 costs less than half the price of a Tesla Model S. Xpeng says it's offering the same level of technology, connectivity features and performance in the P7 for around $50,000 less than Tesla's flagship sedan. 

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. 

In March, Xpeng announced it 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.

In May, Xpeng Motors secured a production license for its fully-owned factory in Zhaoqing, Guangdong Province.

Xpeng aims to be a leading electric automaker in China, which is the world's biggest auto market. An influx of fresh capital from a successful U.S. IPO might help them succeed in its goal.

resource from: Reuters

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