Xpeng Motors latest electric car is called the P7.
Xpeng Motors
Chinese startup electric car Xpeng Motors has filed for an initial public offering (IPO) on the New York Stock Exchange, according to an official statement.
While the company did not disclose how many Class A common shares it would sell, Xpeng Motors said it would sell 429,846,136 Class B shares, according to the Securities and Exchange Commission (SEC) filing released Friday. It also said it plans to increase a farmholder amount of $ 100 million, a figure that is likely to change.
Each ordinary A share is entitled to one vote, while any ordinary B share will give the holder 10 votes.
The submission comes after CNBC reported that it was calling for a further $ 400 million from Alibaba, one of its largest shareholders, the Qatar Investment Authority (QIA) and Abu Dhabi’s sovereign wealth fund Mubadala. QIA and Mubadala both invested $ 100 million each as part of that round.
Xpeng’s drive for a New York IPO comes amid escalating tensions between the US and China that have threatened Chinese companies on Wall Street.
The IPO will give Xpeng another injection of cash, as it faces stiff competition in China from a number of players, including Li Auto, which was recently mentioned in the US, WM Motor and Nio. But the company also competes with Tesla, which has sought to increase its presence in China with a Shanghai factory.
Earlier this year, Tesla began launching its Model 3 sedan at the Shanghai factory to consumers in China.
Xpeng currently has two cars on the market – the G3 SUV and the P7 sedan. The latter competes with Tesla’s Model 3.
G3 production started in November 2018 and as of July 31, 2020, Xpeng said it had delivered 18,741 units to customers. The P7 began rolling out to customers in May this year and as of July 31, Xpeng had delivered 1,966 units of the car to customers.
The company plans to launch a third sedan of electric cars in 2021, the company said in the SEC report.
Xpeng, which was founded in 2015, has tried to differentiate itself from competitors by talking about its investment in software. The company has a feature called XPILOT that gives cars some semi-autonomous driving features such as automated parking. XPILOT has developed its own home and Xpeng positions it as a rival to Tesla’s Autopilot.
Finances and risks
In the six months ended June 30, Xpeng brought in 1 billion yuan ($ 141.9 million) in revenue, down from 1.23 billion yuan in the same period last year. Some of Xpeng’s stores were forced to close during the height of the coronavirus pandemic in China in February and March.
However, the net loss for the period shrank to 795.8 million yuan from 1.92 billion in the first six months of 2019.
China’s electric car market has been supported in recent years by favorable policies including subsidies. Some new subsidies for energy reform and tax breaks policy that were set to expire this year were extended to 2022.
Xpeng marked any elimination or reduction of this policy as having the potential to “negatively impact” its business.
The trade war between the US and China and subsequent tariffs could also affect Xpeng, the company warned.
“Although we do not currently export any of our Smart EVs (electric cars) to the United States, it is not yet clear what impact these tariff negotiations may have or what further actions governments may take, and tariffs could potentially affect our raw material prices. , “said the SEC filing.
Xpeng also addressed the legislation passed by the U.S. Senate in May, which increased controls on Chinese companies listed on U.S. exchanges with the potential for delisting for some foreign companies.
“If such agreements materialize, the resulting legislation could have a material and adverse impact on the share performance of China-based publishers named in the United States. It is unclear if this proposed legislation would be implemented,” the company said.
Credit Suisse, JPMorgan and Bank of America, are the underwriters for the IPO.
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