XPeng and Didi join forces with new affordable EV brand on the horizon
XPeng Motors has announced its acquisition of Didi Global's EV business. The deal, valued at around $744 million, is set to pave the way for a new, affordable EV brand codenamed “Mona,” slated for a 2024 launch. Let's not forget that VW owns a sizeable chunk of XPeng courtesy of A recent deal.
XPeng is known for its higher-end, smart electric vehicles like the G9 SUV and P7 electric sedan. Didi, on the other hand, is a ride-hailing behemoth in China. The acquisition allows XPeng to tap into Didi's extensive mobility ecosystem, while Didi gets to be a strategic shareholder in XPeng.
With this move, XPeng wants to enter a completely new market segment for the company. For now codenamed “Mona,” the project aims to produce A-class smart EVs priced around $20,630, targeting the mass-market segment. This is a significant departure from XPeng's current lineup, which caters to a more premium market. The Mona will be a new brand, it will be distinct from XPeng's existing products, and it's designed to accelerate the company's production and sales growth.
Didi will also provide support from its nationwide shared mobility market, which is a fancy way of saying that Didi's vast network of ride-hailing services will help promote and possibly utilize Mona vehicles. The companies have even set performance incentives based on the mass production of Mona and Didi's achievement of sales targets. If Mona sells like hotcakes - 180,000 units a year for two consecutive years - Didi could receive up to 5% of XPeng's equity.
About two years ago, XPeng's CEO, He Xiaopeng, was skeptical about the feasibility of offering competitive self-driving features in the $20,630 price range. Fast forward to today, and he's singing a different tune. Thanks to technological innovation and cost reduction, Mr. He now sees a "clear path" to offering fully autonomous driving cars in this price segment.
While the partnership sounds promising, there are still many unknowns. For instance, it's unclear whether XPeng will create an entirely new channel for the Mona project. Also, Didi's CEO, Cheng Wei, has been notably uncertain about the car-making business, which might explain why Didi sold its EV business in the first place.
Didi had initially planned to build cars under a project codenamed "Da Vinci," which has now been abandoned. Some of the R&D staff and equipment from this project will be transferred to XPeng. So, in a way, Mona is Da Vinci's more successful sibling, born from the union of two industry giants.
The XPeng-Didi partnership could be a game-changer in the EV market, especially in the affordable segment. But as with any ambitious venture, the road ahead is filled with challenges and uncertainties. For now, all eyes are on 2024, when the first Mona model is expected to hit the roads. Will it be the affordable, smart EV that many have been waiting for? Or will the direction change along the way and we’ll see yet another posh electric SUV?
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