With the intensification of the elimination race in the car market, many new force car companies in China that have not yet achieved profitability have sought external investment or cooperation to enhance their cash reserves and cope with fierce competition in the coming years.
On December 6th, Xiaopeng Motors announced that Volkswagen has completed the authorized issuance of 94.079255 million new shares for Xiaopeng Investment, with a total subscription amount of approximately 705.6 million US dollars. The announcement shows that Xiaopeng Motors and Volkswagen (China) Investment Co., Ltd. have signed a technical framework agreement for strategic technological cooperation; And issue Class A common shares to Volkswagen (or a nominee of Volkswagen, which is an affiliate of Volkswagen) under general authorization in accordance with the share purchase agreement. Xiaopeng Motors plans to use the net proceeds from the investment for general corporate purposes, including meeting operational capital needs. After the transaction is completed, Volkswagen Group will receive an observer seat on the board of directors of Xiaopeng Motors.
According to information disclosed by Volkswagen, Volkswagen (China) Technology Co., Ltd. (VCTC) will become a partner of Xiaopeng Motors in the development field. The company gathers research and development, innovation, and procurement functions and is the largest research and development base of the Volkswagen Group except for Wolfsburg.
In the initial stage of cooperation, Volkswagen and Xiaopeng Motors plan to jointly develop two electric models under the Volkswagen brand for the mid size car market in China. The new car will supplement the Volkswagen brand's product portfolio based on the MEB platform and is planned to enter the market in 2026.
However, before the official delivery of the cooperation, Volkswagen's cooperation had already brought some "non cash losses" to Xiaopeng Motors. According to the previously disclosed technology cooperation framework agreement, Volkswagen Group will acquire approximately 4.99% of Xiaopeng Automobile's equity at a price of $15 per ADS (American Depositary Stock, with each ADS representing two Class A common shares).
But after the signing of the cooperation agreement, the stock price of Xiaopeng Motors continued to rise. On September 29th, the closing price of the company's US stock was $18.36. An analyst told reporters that due to the rise in Xiaopeng's stock price, the value of Volkswagen's equity investment shares has correspondingly increased. According to Generally Accepted Accounting Principles, the fair value of this change needs to be included in Xiaopeng Automobile's financial statement profit and loss.
In addition to investing with Volkswagen, the delivery of the cooperation between Xiaopeng Motors and Didi was completed on November 13th. Xiaopeng Motors issued 3.25% of the total share capital of A-class ordinary shares to Didi as the initial consideration, and acquired assets and research and development capabilities related to Didi's intelligent electric vehicle project, making Didi a strategic shareholder of Xiaopeng Motors. The first batch of shares will be locked for 24 months.
According to the third quarter financial report, as of September 30, Xiaopeng Automobile's cash and cash equivalents, restricted cash, short-term investments, and fixed deposits amounted to 36.48 billion yuan, an increase of 8% month on month and 2.74 billion yuan compared to the previous quarter.
In addition, in July this year, Abu Dhabi investment firm CYVN completed a strategic investment of approximately $1.1 billion in NIO through targeted issuance of new shares and transfer of old shares. In September and October this year, NIO successfully issued a total of $1.15 billion in convertible senior bonds, which enhanced NIO's cash reserves. As of September 30th, NIO's cash and cash equivalents, restricted cash, short-term investments, and long-term fixed deposits amounted to RMB 45.2 billion, an increase of RMB 13.7 billion from the previous quarter.
At the end of August, Nezha Automobile announced the completion of the Crossover round of financing with a total amount of 7 billion yuan. Nezha Automobile CEO Zhang Yong stated that the company has over 10 billion yuan in funds on its books.
On November 20th, Stellantis Group and Lingpao Automobile completed the delivery of their cooperation, with an additional issuance price of HKD 43.8 and Lingpao Automobile's total proceeds of HKD 8.5 billion. As of September 30, 2023, the balance of zero cash and cash equivalents, restricted cash, financial assets recognized in profit or loss at fair value, and bank fixed deposits was 11.63 billion yuan.
Previously, Yang Honghai, COO of Kia China, stated that foreign car companies with slow progress in electrification can wait until the new forces in the automotive industry are struggling to operate and "buy bottom". Now, it seems that this sign is turning into reality.