Electric Vehicle Startup Xpeng Motors Plans to Sell Another 40 Million American Depositary Shares as Investor Interest Remains High
【Summary】Chinese electric vehicle startup Xpeng Motors plans to sell another 40 million American Depositary Shares (ADS) to the public, which represent 80 million Class A ordinary shares. The offering comes as companies developing electric vehicles and other related technology continue to be hot stocks for investors. Xpeng launched its U.S. IPO in August. The company’s shares are listed on the NYSE under the stock symbol "XPEV”.
Chinese electric vehicle startup Xpeng Motors plans to sell another 40 million American Depositary Shares (ADS) to the public, which represent 80 million Class A ordinary shares. The offering comes as companies developing electric vehicles and other related technology continue to be hot stocks for investors.
Xpeng launched its U.S. IPO in August. The company's shares are listed on the NYSE under the stock symbol "XPEV".
In addition, the company has granted the underwriters a 30-day option to purchase up to 6 million additional shares, according to Xpeng's SEC filing with the Securities and Exchange Commission (SEC) on Monday.
XPeng said in its filing that each Class A ordinary share is priced up to $25.33, which is calculated as a maximum price per ADS of $50.66. Each ADS is equivalent to two Class A ordinary shares.
The automaker estimates that it will receive net proceeds of roughly $1.9 billion from the public offering, or roughly $2.2 billion if the underwriters exercise the option to purchase additional ADSs based on last Friday's closing price of $49.34 per share.
The net proceeds will be used for the continued development of Xpeng's electric vehicles, including hardware & connected vehicle technologies and the expansion of Xpeng's EV charging network. Xpeng also plans to use the proceeds to expand its global sales & marketing outside of China. Last month the automaker delivered the first batch vehicles to Norway.
Xpeng is emerging as a strong competitor to Tesla in its home country. The company was founded in 2014. Instead of targeting more affluent consumers with its electric vehicles, Xpeng is targeting younger, more tech-savvy buyers. This group of buyers represents over 30% of car buyers in China, according to IHS Markit.
Xpeng's G3 SUV and P7 smart sedan come packed with connected technology that appeals to more tech-savvy buyers. This segment of buyers also includes those more likely to purchase a battery powered vehicle.
The P7 sedan for example, costs less than half the price of a Tesla Model S, its closest competitor in China. But Xpeng says it's offering the same level of technology, connectivity features and performance for around $50,000 less than the Model S.
Xpeng's P7 also achieved an NEDC Range of 439 Miles, the longest range of all EVs sold in China, according to the company. The P7 features an all-wheel-drive setup with dual electric motors reaching 0-60 mph in 4 seconds.
In September, Xpeng announced a new battery leasing option. The battery leasing plan is intended to lower the cost of purchasing a new Xpeng vehicle by not charging the customer for the price of the battery up front. An EV battery pack is a significant percentage of an electric vehicle's cost, adding thousands of dollars to the sticker price.
Instead of purchasing the battery with the vehicle, Xpeng's customers pay the battery usage fee in 84 installments on a monthly basis. After 7 years, the consumer can take ownership of the battery pack.
Customers in China can purchase Xpeng's G3 SUV without the battery for 122,800 RMB (US$17,966) instead of the 162,800 RMB (US$23,747). The battery leasing option costs an additional 780 yuan (US$114) per month for the longer range battery pack.
The company offers a 30% down payment option for consumers to get the battery-free vehicle, so a customer will only need a down payment of 36,840 yuan ($5,390) to drive home the G3 SUV.
Although Xpeng's sales numbers are relatively small when compared to legacy automakers including segment leader Tesla, its sales continue to grow and that's a positive sign for investors.
After the global pandemic put a dent in auto sales around the world in Q1 2020, Xpeng's sales have risen in the second and third quarter. The company said it delivered a total of 4,224 new vehicles last month, representing a 342% year-on-year increase. As of November 30, XPeng's year-to-date deliveries reached 21,341 units, surging 87% from just a year ago.
The company's total revenue for Q3, its first as a publicly traded company, was RMB 1,990.1 million (US$293.1 million), representing an increase of 342.5% from the same period in 2019 and an increase of 236.9% from RMB 590.8 million for the second quarter of 2020.
XPeng is headquartered in Guangzhou, China, with offices in Beijing, Shanghai, Silicon Valley, and San Diego. The Company's vehicles are manufactured at plants in Zhaoqing and Zhengzhou, located in Guangdong and Henan provinces.
The announcement of Xpeng's ADS offering did increase its stock price. On Tuesday, the stock pulled back from its opening price of $51.53 to close at $48.69.
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