Another Chinese EV maker is raising money and listing shares in the U.S—capitalizing on the current hot market for EV-related stock issues.
Here’s what investors need to know about Xpeng—which will trade under the stock ticker XPEV—along with some recent history.
The Stock Issue
Xpeng is selling 85 million ADRs, short for American depositary receipts. ADRs are, essentially, stock of foreign listed companies that trade in the U.S. The company hopes to raise about $1 billion based on expected ADR pricing.
The company filed its updated registration statement this past week—including the pricing range of $11 to $13 per ADR. Final IPO pricing should happen in days.
The Vehicles
Founded in 2015, Xpeng makes an SUV, named the G3, and a sedan, dubbed the P7. The vehicles start at about $21,000 and $32,000, respectively, after government alternative fuel purchase incentives.
The G3 was a top seller in China in 2019. And the P7 has almost 440 miles of range on a single charge. The company believes that is the best available range in China, based on MIIT NEV Catalogues. (MIIT is short for Ministry of Industry and Information Technology.)
G3 production began in November 2018. P7 production began in July 2020. The company has delivered roughly 20,000 cars to date. Chinese peer NIO (NIO), for comparison, has delivered about 45,000 cars over the same span.
The Strategy
Range can be an issue in China because the charging network isn’t as extensive as it is in the U.S. and Europe.
Li Auto (ticker: LI), which recently raised money in an IPO, includes a generator on board for on-the-fly battery recharging. NIO offers battery swapping. Xpeng, for now, appears content with higher range battery packs.
What’s more, the company differentiates itself with internally developed autonomous driving features that are tuned for Chinese driving conditions.
“Our XPILOT 3.0 is expected to offer the highest level of autonomous driving capabilities in commercially available passenger vehicles today,” reads the company’s IPO filing. “Through our proprietary software, core hardware and data technologies, we are able to develop and deploy innovative products rapidly and efficiently, which gives us an advantage over our competitors in China.”
Range anxiety hasn’t hurt EV adoption. China remains the largest market in the world for EV technology.
The Manufacturing
The company, right now, takes a hybrid approach to manufacturing. It makes the G3 through a contract manufacturing collaboration with Haima Automobile (000572.China). Xpeng is building its own plant to make the P7.
The EV Market
The IPO, quite frankly, looks well timed.
EV stocks are on fire. EV stocks Barron’s tracks are up roughly 250% year to date, far better than comparable returns of the Dow Jones Industrial Average and S&P 500. The 2020 gains, however, are only part of the story. Many EV makers have raised billions this year as investors’ thinking about the future of EVs has shifted.
EV investors—as well as EV makers—probably have Tesla (TSLA) to thank for that. Tesla stock, for its part, are up about 370% year to date, making it the most valuable car company in the world. In fact, including management stock options, Tesla’s fully diluted market capitalization is about $470 billion, more than twice market cap of Toyota Motor (TM)—the second most valuable car company on the globe.
In addition to Xpeng’s IPO, Nikola (NKLA) raised roughly $800 million when it merged with a special purpose acquisition company, or SPAC. Li Auto raised about $1.1 billion in its IPO.
Hyliion, Fisker, Canoo, and Lordstown Motor are—like Nikola—merging with SPACs, raising $2.3 billion cumulatively in the process.
Electric commercial vehicle maker Workhorse (WKHS) and NIO raised money in slightly different ways. Workhorse issued a $70 million convertible bond and NIO raised money from a local Chinese government.
That’s a lot of fresh funding. Investors are bullish about an all-electric future.
Write to Al Root at allen.root@dowjones.com
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