FORDISM 2.0
Xpeng Soars After Buying Didi Unit to Consolidate MarketFROM STATE CAPITALI$M TO MONOPOLY CAPITALI$M
Bloomberg News
Mon, August 28, 2023
(Bloomberg) -- Xpeng Inc.’s shares soared after it agreed to buy Didi Global Inc.’s smart-car development arm in a deal that both eliminates a potential competitor in the crowded electric-vehicle market and gives it a tech-savvy partner in a new venture.
The HK$5.84 billion ($744 million) all-stock deal will see Didi emerge with a 3.25% stake in Xpeng, according to an exchange filing Monday. Xpeng shares surged more than 16% in Hong Kong trading before paring gains to close 11% higher. Its American depositary receipts gained 5% by 4:27 a.m. in New York.
As part of the deal, Xpeng plans to launch a new EV brand in partnership with Didi in 2024. Dubbed Project “MONA,” the cars will target the mass market segment with a price tag of around 150,000 yuan — or about $20,000. The partnership comes just over a month after Xpeng received a $700 million investment from German auto giant Volkswagen AG to jointly develop EVs for the Chinese market — and should help ease investor concerns about sluggish sales in the face of intensifying competition from the likes of Nio Inc., BYD Co. and Tesla Inc.
Read More: Tesla Started a China Price War That May Destroy Some Carmakers
Xpeng, which has invested heavily in autonomous driving features, said it would explore collaborations with Didi on fleet management, marketing, insurance, charging facilities, robotaxis and international markets.
What Bloomberg Intelligence says:
Xpeng’s partnership with China’s largest shared-mobility company Didi, including acquiring the latter’s EV project assets, might enable the startup automaker to enhance its autonomous-driving algorithms by tapping intensive vehicle-generated data from Didi’s mobility platform. Near-term margin pressure persists, yet increasing technology service revenue and greater scale from a new mass-market brand may support Xpeng’s first annual profit in 2026. — Joanna Chen & Steve Man
For Didi, the deal marks a retreat from the car-making business, once considered a potential driver of growth for the car-hailing company.
Chinese technology leaders, including Didi and Xiaomi Corp., have been trying to inch into the capital-intensive EV boom, with a bet to make the cars more “intelligent” with autonomous driving and other personalized interactive features. Yet the already over-crowded market has made it even tougher for the late-comers to obtain a manufacturing license and gain market share.
Didi, once feted as the national champion that pushed Uber Technologies Inc. out of the country, was driven off New York’s main bourse after Chinese regulators launched investigations into the security of its data. The company is gradually resuming its car-hailing expansion.
Investors have been counting on Didi coming out of the penalty box. More than a year after exiting the New York Stock Exchange following Beijing’s tech crackdown, the Chinese ride-hailing firm boasts a market value around $15 billion. That’s larger than just about any other firm whose shares are primarily quoted over-the-counter in the US, and even puts it among the top ranks of NYSE-listed firms American Depositary Receipts, data compiled by Bloomberg show.
Nine-year-old Xpeng just reported a wider-than-expected quarterly loss as it struggles to ramp up deliveries. It has stoked investor concern with its sales decline and weak margins, and was forced to delay its profitability target and overhaul internal management.
Didi could increase its stake in Xpeng to 5% if the new mass-market brand reaches 100,000 deliveries for two consecutive years, according to the agreement.
--With assistance from Peter Elstrom, Linda Lew and Farah Elbahrawy.
Bloomberg News
Mon, August 28, 2023
(Bloomberg) -- Xpeng Inc.’s shares soared after it agreed to buy Didi Global Inc.’s smart-car development arm in a deal that both eliminates a potential competitor in the crowded electric-vehicle market and gives it a tech-savvy partner in a new venture.
The HK$5.84 billion ($744 million) all-stock deal will see Didi emerge with a 3.25% stake in Xpeng, according to an exchange filing Monday. Xpeng shares surged more than 16% in Hong Kong trading before paring gains to close 11% higher. Its American depositary receipts gained 5% by 4:27 a.m. in New York.
As part of the deal, Xpeng plans to launch a new EV brand in partnership with Didi in 2024. Dubbed Project “MONA,” the cars will target the mass market segment with a price tag of around 150,000 yuan — or about $20,000. The partnership comes just over a month after Xpeng received a $700 million investment from German auto giant Volkswagen AG to jointly develop EVs for the Chinese market — and should help ease investor concerns about sluggish sales in the face of intensifying competition from the likes of Nio Inc., BYD Co. and Tesla Inc.
Read More: Tesla Started a China Price War That May Destroy Some Carmakers
Xpeng, which has invested heavily in autonomous driving features, said it would explore collaborations with Didi on fleet management, marketing, insurance, charging facilities, robotaxis and international markets.
What Bloomberg Intelligence says:
Xpeng’s partnership with China’s largest shared-mobility company Didi, including acquiring the latter’s EV project assets, might enable the startup automaker to enhance its autonomous-driving algorithms by tapping intensive vehicle-generated data from Didi’s mobility platform. Near-term margin pressure persists, yet increasing technology service revenue and greater scale from a new mass-market brand may support Xpeng’s first annual profit in 2026. — Joanna Chen & Steve Man
For Didi, the deal marks a retreat from the car-making business, once considered a potential driver of growth for the car-hailing company.
Chinese technology leaders, including Didi and Xiaomi Corp., have been trying to inch into the capital-intensive EV boom, with a bet to make the cars more “intelligent” with autonomous driving and other personalized interactive features. Yet the already over-crowded market has made it even tougher for the late-comers to obtain a manufacturing license and gain market share.
Didi, once feted as the national champion that pushed Uber Technologies Inc. out of the country, was driven off New York’s main bourse after Chinese regulators launched investigations into the security of its data. The company is gradually resuming its car-hailing expansion.
Investors have been counting on Didi coming out of the penalty box. More than a year after exiting the New York Stock Exchange following Beijing’s tech crackdown, the Chinese ride-hailing firm boasts a market value around $15 billion. That’s larger than just about any other firm whose shares are primarily quoted over-the-counter in the US, and even puts it among the top ranks of NYSE-listed firms American Depositary Receipts, data compiled by Bloomberg show.
Nine-year-old Xpeng just reported a wider-than-expected quarterly loss as it struggles to ramp up deliveries. It has stoked investor concern with its sales decline and weak margins, and was forced to delay its profitability target and overhaul internal management.
Didi could increase its stake in Xpeng to 5% if the new mass-market brand reaches 100,000 deliveries for two consecutive years, according to the agreement.
--With assistance from Peter Elstrom, Linda Lew and Farah Elbahrawy.
Chinese ride-hailing firm Didi Global sells its EV unit to Xpeng as the two plan to launch a mass-market brand in 2024
South China Morning Post
Mon, August 28, 2023
Chinese ride-hailing firm Didi Global has agreed to sell its electric vehicle (EV) arm to EV maker Xpeng in exchange for shares worth HK$5.84 billion (US$744 million), exiting a once promising business that is now crowded with 200-odd players.
Guangzhou-based Xpeng will issue the shares at HK$64.03 apiece to pay for the asset, according to their exchange filings on Monday. Beijing-based Didi, which was slapped with an 8 billion yuan (US$1.1 billion) fine for data violations, will own 3.25 per cent of Xpeng's enlarged capital.
"The Chinese EV market has great potential, but latecomers now have slim chances of making a success due to fierce competition," said Cao Hua, a partner at Shanghai-based private equity firm Unity Asset Management, which invests in vehicle supply-chain firms. "The deal enables Xpeng to take advantage of Didi's business platforms to promote its vehicles while helping Didi dodge the cutthroat market before its designed models go into production."
Do you have questions about the biggest topics and trends from around the world? Get the answers with SCMP Knowledge, our new platform of curated content with explainers, FAQs, analyses and infographics brought to you by our award-winning team.
The Didi Global headquarters in Beijing, pictured on June 9, 2022. Photo: Bloomberg alt=The Didi Global headquarters in Beijing, pictured on June 9, 2022. Photo: Bloomberg>
The move follows Volkswagen Group's US$700 million investment in Xpeng in July for a 4.99 per cent stake. The two companies plan to roll out two VW-badged midsize EVs in 2026 on the mainland.
Xpeng jumped 10.9 per cent to HK$72.20 in Hong Kong in a bullish market as the Hang Seng Index logged a 1 per cent gain. Didi declined 2.2 per cent to US$3.17 in over-the-counter trading in New York on Friday.
Didi will continue to "deepen our cooperation with Xpeng in multiple areas, driving transformation of the transportation and automotive industries", Cheng Wei, chairman and CEO of Didi, said in a statement on Monday.
He Xiaopeng, Xpeng's co-founder and CEO, said the EV start-up will explore working with Didi in certain fields such as marketing, insurance service, charging, robotic taxis and international expansion as the two pursue a leading position in the future of mobility.
"Both parties will explore cooperation opportunities in various areas," he said in a statement. "Xpeng will continue to create value and capture growth opportunities in the mobility ecosystem as well as in autonomous driving."
Didi will be entitled to increase its stake in Xpeng under a performance-based incentive mechanism, according to the exchange filings. Xpeng plans to launch a new brand, Mona, under the partnership with Didi in 2024. Didi will have the right to increase its holdings in the EV maker if the new brand - targeting a mass-market price segment of 150,000 yuan - meets delivery targets.
At present, Xpeng builds smart EVs featuring preliminary autonomous driving systems and fast charging technology, which are priced above 200,000 yuan.
The Cyberspace Administration of China (CAC) probed Didi between 2021 and 2022, announcing in July last year that the firm had committed 16 offences involving the illegal collection of data from drivers and passengers. It also fined the firm 8 billion yuan before allowing it to resume registrations of new users and make its main app available for download again in China in January.
Didi's car plans can be traced back to 2016 when it created an autonomous driving unit. The unit became an independent company in 2019, developing autonomous driving technology with a team of over 250 engineers.
Xpeng, Shanghai-based Nio and Beijing-headquartered Li Auto are viewed as China's main challengers to Tesla.
Xpeng's G6 sport-utility vehicle, launched in June, has limited autonomous driving abilities and can navigate the streets of China's leading cities, like Beijing and Shanghai, using Xpeng's X NGP (Navigation Guided Pilot) software, which is similar to Tesla's Full Self-Driving (FSD) system. FSD has not been approved by Chinese authorities.
Copyright (c) 2023. South China Morning Post Publishers Ltd. All rights reserved.
South China Morning Post
Mon, August 28, 2023
Chinese ride-hailing firm Didi Global has agreed to sell its electric vehicle (EV) arm to EV maker Xpeng in exchange for shares worth HK$5.84 billion (US$744 million), exiting a once promising business that is now crowded with 200-odd players.
Guangzhou-based Xpeng will issue the shares at HK$64.03 apiece to pay for the asset, according to their exchange filings on Monday. Beijing-based Didi, which was slapped with an 8 billion yuan (US$1.1 billion) fine for data violations, will own 3.25 per cent of Xpeng's enlarged capital.
"The Chinese EV market has great potential, but latecomers now have slim chances of making a success due to fierce competition," said Cao Hua, a partner at Shanghai-based private equity firm Unity Asset Management, which invests in vehicle supply-chain firms. "The deal enables Xpeng to take advantage of Didi's business platforms to promote its vehicles while helping Didi dodge the cutthroat market before its designed models go into production."
Do you have questions about the biggest topics and trends from around the world? Get the answers with SCMP Knowledge, our new platform of curated content with explainers, FAQs, analyses and infographics brought to you by our award-winning team.
The Didi Global headquarters in Beijing, pictured on June 9, 2022. Photo: Bloomberg alt=The Didi Global headquarters in Beijing, pictured on June 9, 2022. Photo: Bloomberg>
The move follows Volkswagen Group's US$700 million investment in Xpeng in July for a 4.99 per cent stake. The two companies plan to roll out two VW-badged midsize EVs in 2026 on the mainland.
Xpeng jumped 10.9 per cent to HK$72.20 in Hong Kong in a bullish market as the Hang Seng Index logged a 1 per cent gain. Didi declined 2.2 per cent to US$3.17 in over-the-counter trading in New York on Friday.
Didi will continue to "deepen our cooperation with Xpeng in multiple areas, driving transformation of the transportation and automotive industries", Cheng Wei, chairman and CEO of Didi, said in a statement on Monday.
He Xiaopeng, Xpeng's co-founder and CEO, said the EV start-up will explore working with Didi in certain fields such as marketing, insurance service, charging, robotic taxis and international expansion as the two pursue a leading position in the future of mobility.
"Both parties will explore cooperation opportunities in various areas," he said in a statement. "Xpeng will continue to create value and capture growth opportunities in the mobility ecosystem as well as in autonomous driving."
Didi will be entitled to increase its stake in Xpeng under a performance-based incentive mechanism, according to the exchange filings. Xpeng plans to launch a new brand, Mona, under the partnership with Didi in 2024. Didi will have the right to increase its holdings in the EV maker if the new brand - targeting a mass-market price segment of 150,000 yuan - meets delivery targets.
At present, Xpeng builds smart EVs featuring preliminary autonomous driving systems and fast charging technology, which are priced above 200,000 yuan.
The Cyberspace Administration of China (CAC) probed Didi between 2021 and 2022, announcing in July last year that the firm had committed 16 offences involving the illegal collection of data from drivers and passengers. It also fined the firm 8 billion yuan before allowing it to resume registrations of new users and make its main app available for download again in China in January.
Didi's car plans can be traced back to 2016 when it created an autonomous driving unit. The unit became an independent company in 2019, developing autonomous driving technology with a team of over 250 engineers.
Xpeng, Shanghai-based Nio and Beijing-headquartered Li Auto are viewed as China's main challengers to Tesla.
Xpeng's G6 sport-utility vehicle, launched in June, has limited autonomous driving abilities and can navigate the streets of China's leading cities, like Beijing and Shanghai, using Xpeng's X NGP (Navigation Guided Pilot) software, which is similar to Tesla's Full Self-Driving (FSD) system. FSD has not been approved by Chinese authorities.
Copyright (c) 2023. South China Morning Post Publishers Ltd. All rights reserved.
BYD’s iPad-Making Arm Pays $2.2 Billion for Jabil China
Bloomberg News
Sun, August 27, 2023
(Bloomberg) -- The electronics arm of electric-vehicle maker BYD Co. agreed to buy Jabil Inc.’s manufacturing business in China for 15.8 billion yuan ($2.2 billion), expanding its production base in the world’s largest mobile arena.
BYD Electronic International Co., a non-wholly owned unit of one of China’s biggest EV makers, is taking over the US company’s product manufacturing business located in Chengdu and Wuxi, China, it said in a statement Monday. The pact includes the manufacturing of products for existing customers.
The deal marks the latest retreat by a manufacturer from China, as geopolitical tensions force suppliers to scout alternative locations for making the components that go into everything from Apple Inc. iPhones and iPads to Dell computers. It also accelerates BYD’s expansion into mobile electronics. The EV giant’s electronics arm makes a wide variety of products from smartphone cases to wireless modules used in cars, and it operates plants in China and Vietnam that make components for Apple.
Shares of BYD Electronic dropped 5.6% in early Hong Kong trading, while parent BYD advanced 2.1%.
Jabil has been one of the largest contract manufacturers in China, hiring tens of thousands of workers in Sichuan, Guangdong and Jiangsu provinces to make and assemble parts for Apple. The company said in a separate statement the sale will allow it to “enhance our shareholder-centric capital framework, including incremental share buybacks.”
Amid the prolonged US-China trade war, some Apple suppliers have reduced their exposure to China. Catcher Technology Co. sold two key businesses in China to a local peer, while iPhone maker Wistron Corp. sold its Apple assembly plants in the country to Luxshare Precision Industry Co.
What Bloomberg Intelligence Says
Jabil’s deal with BYD Electronic to sellits mobility business-related production arms inChina for $2.2 billion might imply a forward price-to-sales ratio of 0.58x, we calculate, much higherthan the BI Global EMS/ODM peer group’s 0.35xand Jabil’s own valuation of 0.39x. The sale at apremium could help Jabil further reduce exposure to consumer electronics, focus on new growthdrivers and boost buybacks.
- Steven Tseng and Charles Shum, analysts
Bloomberg News
Sun, August 27, 2023
(Bloomberg) -- The electronics arm of electric-vehicle maker BYD Co. agreed to buy Jabil Inc.’s manufacturing business in China for 15.8 billion yuan ($2.2 billion), expanding its production base in the world’s largest mobile arena.
BYD Electronic International Co., a non-wholly owned unit of one of China’s biggest EV makers, is taking over the US company’s product manufacturing business located in Chengdu and Wuxi, China, it said in a statement Monday. The pact includes the manufacturing of products for existing customers.
The deal marks the latest retreat by a manufacturer from China, as geopolitical tensions force suppliers to scout alternative locations for making the components that go into everything from Apple Inc. iPhones and iPads to Dell computers. It also accelerates BYD’s expansion into mobile electronics. The EV giant’s electronics arm makes a wide variety of products from smartphone cases to wireless modules used in cars, and it operates plants in China and Vietnam that make components for Apple.
Shares of BYD Electronic dropped 5.6% in early Hong Kong trading, while parent BYD advanced 2.1%.
Jabil has been one of the largest contract manufacturers in China, hiring tens of thousands of workers in Sichuan, Guangdong and Jiangsu provinces to make and assemble parts for Apple. The company said in a separate statement the sale will allow it to “enhance our shareholder-centric capital framework, including incremental share buybacks.”
Amid the prolonged US-China trade war, some Apple suppliers have reduced their exposure to China. Catcher Technology Co. sold two key businesses in China to a local peer, while iPhone maker Wistron Corp. sold its Apple assembly plants in the country to Luxshare Precision Industry Co.
What Bloomberg Intelligence Says
Jabil’s deal with BYD Electronic to sellits mobility business-related production arms inChina for $2.2 billion might imply a forward price-to-sales ratio of 0.58x, we calculate, much higherthan the BI Global EMS/ODM peer group’s 0.35xand Jabil’s own valuation of 0.39x. The sale at apremium could help Jabil further reduce exposure to consumer electronics, focus on new growthdrivers and boost buybacks.
- Steven Tseng and Charles Shum, analysts
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