Chinese EV Startup Xpeng Secures $2 Billion Credit Line to Expand its Operations as it Takes on Tesla
Electric automaker Tesla receives most of the attention in the U.S. and around the world as a leading electric vehicle maker. But in China, which is the world's biggest auto market, new electric vehicle startups are emerging as strong competitors to Tesla, including Xpeng Inc. (Xpeng) and NIO Inc.
Xpeng announced on Tuesday that it secured a $2 billion (12.8 billion yuan) line of credit from five Chinese banks. The startup electric automaker will use the funds to expand its operations as it looks to take on Tesla in its home country.
The agreement was signed with Agricultural Bank of China, Bank of China, China Construction Bank, China CITIC Bank and Guangzhou Rural Commercial Bank, according to Reuters.
Xpeng, founded in 2014, is a publicly traded company in the U.S. and launched its U.S. IPO in August of last year. The company's stock trades on the New York Stock Exchange (NYSE) under the symbol "XPEV".
The company originally planned to sell 85 million American Depositary Shares (ADS) in its IPO, but Xpeng increased that to about 99.7 million shares after higher-than-expected demand from investors in EV related stocks, which also led to Tesla's record stock surge in 2020.
Xpeng is also backed by China's e-commerce giant Alibaba, which is China's equivalent of Amazon.
The news of Xpeng's new $2 billion credit line sent Xpeng's stock up nearly 15% to $50.85. Xpeng's share price has been slowly climbing over the past several months. The stock was trading below $20.00 back in October. With the latest stock surge, Xpeng has a market cap of just over $40 billion.
Xpeng released its first vehicle the G3 SUV in 2018. The company followed that up with the P7 Smart Sedan, which went on sale in April 2020 in the China market. The P7 is a direct competitor to Tesla's flagship Model S sedan in China. Xpeng's P7 sedan however costs around half as much as the Model S.
Instead of targeting more affluent consumers with its electric vehicles like Tesla's Model X and Model S, 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 says it's offering the same level of technology, connectivity features and performance for around $50,000 less than the Model S. The P7 offers self-parking and Xpeng's automated driving suite called XPilot. The fully-electric P7 sedan features an all-wheel-drive setup with dual electric motors reaching 0-60 mph in 4 seconds.
The P7 also achieves an NEDC Range of 439 Miles, the longest range of all EVs sold in China, according to the company.
Xpeng is coming off a strong fourth quarter to close out 2020. The company reported record sales for the month of December and record fourth quarter sales.
Xpeng said it achieved a record monthly delivery of 5,700 vehicles in December, including 3,691 units of the company's flagship P7. The company's December deliveries included 2,009 G3 SUVs. The figures represent a 326% increase year-over-year and a 35% increase from November, according to Xpeng.
In total, Xpeng said it delivered 12,964 electric vehicles in the fourth quarter of 2020, representing a 303% increase year-over-year and 51% increase from the third quarter, its first quarter as a publicly traded company. Xpeng said it delivered 8,527 P7 sedans in Q4.
Xpeng also plans to expand outside of China. In September, the automaker exported its first batch of G3 SUVs to Norway, expanding its global presence. It's the first time the company is exporting its electric vehicles from China.
Xpeng is headquartered in Guangzhou, China, with offices in Beijing, Shanghai. The company also has U.S. offices in Silicon Valley, and San Diego, CA. The company's electric vehicles are manufactured at plants in Zhaoqing and Zhengzhou, located in Guangdong and Henan provinces.
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