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Tesla Challenger Xpeng Inc. Aims to Raise $1.8 Billion with its Hong Kong IPO

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【Summary】Chinese smart electric vehicle startup XPeng Inc announced the pricing of its global offering of 85,000,000 shares for its upcoming Hong Kong IPO, following its U.S. IPO last year. The EV startup said it would raise $1.8 billion to expand its product line-up and develop new technologies with its listing in Hong Kong.

Eric Walz    Jun 30, 2021 10:00 AM PT
Tesla Challenger Xpeng Inc. Aims to Raise $1.8 Billion with its Hong Kong IPO
XPeng's flagship P7 smart sedan is strong rival to Tesla's Model S in China.

Chinese smart electric vehicle startup XPeng Inc. announced the pricing of its global offering of 85,000,000 shares for its upcoming Hong Kong IPO, following its U.S. IPO last year. The share price has been set at HK$165.00 (US$21.25) per Class A ordinary share.

XPeng said it would raise $1.8 billion to expand its product line-up and develop new technologies with its new Hong Kong Listing. 

The Class A ordinary shares are expected to begin trading on the main board of the Hong Kong Stock Exchange on Wed July 7, 2021, under the stock code "9868". J.P. Morgan Securities (Far East) Limited and Merrill Lynch (Asia Pacific) Limited are the joint sponsors of the listing in Hong Kong.

Based on the ratio of two Class A ordinary shares per NYSE-listed American depositary share (ADS), the offer price is approximately US$42.52 per ADS based on the current exchange rate of HK$ 7.7604 to US$1.00. The offering equates to 5% of its stock, according to XPeng's prospectus. 

Investors in the global offering will only be able to purchase Class A ordinary shares and will not be able to take delivery of ADSs. The Class A ordinary shares listed on the Hong Kong Stock Exchange will be convertible with the ADSs listed on the NYSE. 

There is an over-allotment option to sell a further 12.75 million shares that would raise an extra $270 million.

XPeng plans to use the net proceeds to further expand its product portfolio, accelerate its expansion in China and develop more advanced electric vehicle technologies, including autonomous driving.

XPeng launched its U.S. IPO in Aug 2020 in order to raise capital from investors pouring money in electric vehicle companies and related stocks. The company raised $1.5 billion with its debut on Wall Street.

XPeng was founded in 2014 and is one of China's hot new EV startups, along with rivals NIO Inc. and Li Auto. All three companies are now publicly traded in the U.S. The company is backed by Chinese e-commerce giant Alibaba.

XPeng is targeting younger, tech savvy buyers in China with its advanced and connected fully-electric vehicles. XPeng's more affordable electric vehicles are viewed as a popular alternative to Tesla models in China

XPeng currently sells its electric vehicles in China and Norway. In Sept 2020, XPeng exported its first batch of vehicles to Europe last September. It's the first time the automaker is selling its electric vehicles outside of its home country. Norway has one of the world's highest EV adoption rates. It's also an important market for rival Tesla.

XPeng is exporting the latest version of its G3 SUV to Norway, which was the company's first vehicle that was unveiled in Dec 2018. The latest version of the G3 is available with an extended NEDC driving range of 323 miles (520 km). It was unveiled at last year's Chengdu Motor Show.

XPeng's second electric vehicle is the P7 smart sedan. The P7 smart sedan first went on sale in April 2020. The flagship electric sedan comes loaded with advanced technology, including an autonomous driving capability.

XPeng's autonomous driving feature is called Navigation Guided Pilot (NGP), which is similar to Tesla's Autopilot and its Full Self-Driving (FSD) feature. It was developed entirely in house by XPeng. Approximately 50% of the company's employees work in R&D developing new technologies, which also includes development of XPeng's AI-powered smart vehicle OS.  

The P7 costs around half the price of a Model S, but offers the same level of technology, connectivity features and performance as the Model S for around $50,000 less. The sedan features an all-wheel-drive setup with dual electric motors.

XPeng's P7 also achieves an NEDC Range of 439 Miles, the longest range of all EVs sold in China. 

In April XPeng unveiled its third vehicle called the P5 during the annual Auto Shanghai car show. The P5 is the world's first production smart EV equipped with automotive-grade LiDAR technology for autonomous driving. Deliveries are expected to start in the fourth quarter of this year. 

XPeng P5 3_0.jpeg

XPeng's new P5 sedan.

Also in April, XPeng announced that it entered into a cooperation agreement with the City of Wuhan to build a second Smart EV factory. The plant will have an annual capacity of 100,000 vehicles, which will help Xpeng better compete in the China market. The project is supported by the Wuhan government. 

XPeng said the factory will cover a planned area of over 733,000 square meters and will include vehicle and powertrain manufacturing, as well as R&D facilities.

In May, XPeng announced record first quarter results on a big jump in vehicle deliveries and revenue. The company reported total revenues of RMB2,950.9 million (US$450.4 million) for the first quarter of this year, representing an increase of 616.1% from the same period last year and a 3.5% increase from the fourth quarter of 2020.

With its upcoming Hong Kong IPO, XPeng is poised to become an even stronger rival to Tesla and other automakers in China, which is the world's biggest electric vehicle market.

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