XPeng enters a strategic partnership with DiDi Global that includes buying its smart car arm

XPeng (NYSE:XPEV) announced late on Sunday that it will accelerate the adoption of Smart EVs and technologies through a strategic partnership with DiDi Global (OTCPK:DIDIY) that includes the purchase of the DiDi’s smart car arm.

The Chinese electric vehicle maker plans to launch an all-new EV brand in 2024, currently being developed under the project name MONA. The plan is to leverage the new brand to expand in the mass market segment of 150K Chinese Renminbi price range and accelerate the adoption of Smart EV and technologies in the segment.

The new model and brand will be differentiated from XPeng-branded products and the main brand. DiDi will provide support from its mobility ecosystem for the MONA project with access to its nationwide shared mobility market. The partnership is expected to pave the way for the XPeng (XPEV) to build highly-popular Smart EV models for the mass market segment in the RMB150K price range.

On the financial end of the partnership, XPeng (XPEV) will issue Class A ordinary shares, representing approximately 3.25% of the outstanding share capital upon completion of the issuance, to acquire assets related to DiDi’s Smart EV project. DiDi will thereby become a strategic shareholder of the XPEV, with a lock-up period of 24 months after the initial closing. Bloomberg reported the purchase of the DiDi smart car arm was completed for $744M.

The agreement also establishes performance-based incentive mechanisms based on the mass production of MONA and sales volume targets to be fulfilled by Didi, subject to which DiDi will be entitled to receive share-based incentives. According to the agreement, XPeng (XPEV) will become the first automotive manufacturing company with comprehensive support from the ecosystem of DiDi. Both parties will explore strategic cooperation in a number of areas, including marketing, financial and insurance services, charging, Robotaxi, and international market expansion.

XPeng (XPEV) is on Seeking Alpha’s Catalyst Watch this week, with its monthly deliveries report due out on September 1.