XPeng (NASDAQ:XPEV) stock rose 8% on Aug. 25 and another 5% over the weekend after announcing it will buy smart EV assets from China’s DiDi Global (OTCMKTS:DIDIY)
DiDi, a ride-hailing company, will get $740 million and take a 3.25% stake in XPeng. The partnership agreement also covers marketing, financial and insurance services, charging, robotaxis and international expansion.
XPeng plans to launch a new EV brand using the DiDi technology next year.
Self-Driving Forward
XPeng has been among the strongest Chinese EV stocks traded in New York for most of 2023, despite continuing problems with its business. The company delivered 11,088 vehicles in July.
But its partnership with Volkswagen (OTCMKTS:VWAGY), the launch of a new design platform, and hope for a government stimulus have maintained investor interest.
For the year XPeng shares are up 86%, a gain trailing that only of Li Auto (NASDAQ:LI), now up 94%. Nio (NYSE:NIO) is up 13% and Polestar (NASDAQ:PSNY) is down for the year.
XPeng will call the brand using DiDi’s technology Mona. It will be listed as a preferred option for DiDi’s 587 million active app users. DiDi also owns a Brazilian ride-sharing company, which could open up Latin America for XPeng.
DiDi was among the companies most impacted by Xi Jinping’s tech crackdown. It had previously tried to make self-driving cars with Volvo (OTCMKTS:VLVLY), which is controlled by Geely (OTCMKTS:GELYF), the company behind Polestar (NASDAQ:PSNYW). XPeng, meanwhile, has been a big investor in self-driving technology but recently lost the head of that division, reportedly to Nvidia (NASDAQ:NVDA).
XPeng is presently worth about four times last year’s sales despite never turning a profit.
XPEV Stock: What Happens Next?
XPeng’s deal-making this year may be seen by some investors as a sign of strength. More likely, this is a sign of weakness. What might change my mind is a profit, however small.
As of this writing, Dana Blankenhorn had a LONG position in NVDA. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
