On February 29th, Xiaopeng Motors (9868.HK, stock price of HKD 34.95, market value of HKD 65.95 billion) announced on the Hong Kong Stock Exchange that it had signed a strategic technology cooperation joint development agreement and entered into a joint procurement plan with Volkswagen Group.
According to the announcement, the company and Volkswagen Group jointly announced that following the announcements made by Xiaopeng Motors on July 26, 2023 and December 6, 2023 regarding Volkswagen's acquisition of 4.99% of Xiaopeng Motors shares and the signing of a strategic technology cooperation framework agreement, Xiaopeng Motors and Volkswagen Group have signed a platform and software strategic technology cooperation joint development agreement, marking a milestone and significant progress in their strategic cooperation. The signing of the joint development agreement will not only accelerate the joint research and development of two B-class pure electric vehicles, but also lay a solid foundation for broader and deeper strategic cooperation between the two sides.
As an important component of the joint development agreement, Xiaopeng Motors and Volkswagen have also entered into a joint procurement plan for shared components of their respective vehicle models and platforms. By integrating the scale advantages of both parties and relying on Volkswagen Group's world-class supply chain capabilities, the joint procurement plan aims to jointly reduce platform costs, fully leverage the synergistic effect of strategic cooperation, and enhance the product strength of the B-class pure electric vehicle jointly developed by both parties.
"The signing of the joint development agreement marks another major milestone in our strategic cooperation with Volkswagen Group. The strategic cooperation model between Volkswagen Group and Xiaopeng Motors has no precedent in the automotive industry. The deep consensus on strategic cooperation between the two sides and the strong trust bond created between the R&D teams in the past eight months have laid a solid foundation for the smooth launch of the project. Gathering Volkswagen Group's globally renowned vehicle R&D and engineering technology strength with Xiaopeng Motors' leading intelligent electric vehicle technology in the industry, we will work hard to create the ultimate intelligent electric vehicle products for Chinese consumers," said He Xiaopeng, Chairman and CEO of Xiaopeng Motors. "Based on a long-term perspective of strategic cooperation, both sides have invested their core strengths and resources into strategic cooperation. Through joint procurement plans, synergies have begun to be realized. I firmly believe that the strategic partnership between Xiaopeng Motors and Volkswagen Group holds broad prospects, and both sides will further explore together."
"China is the largest and fastest growing electric vehicle market in the world. To explore highly promising sub markets and gain leading advantages, speed is crucial. We firmly implement the 'In China, for China' strategy, with the aim of meeting the unique needs of Chinese customers, continuously expanding our local product portfolio, and continuously improving our research and development capabilities. Through cooperation with Xiaopeng Motors, we will shorten the product development cycle, improve efficiency, and optimize cost structure. In a highly price sensitive market environment, this will significantly enhance the economic competitiveness of our products."
"After announcing the strategic partnership last year, the two sides quickly completed the signing of the joint development agreement, demonstrating the tremendous potential of this cooperation. Currently, the two teams are working at full speed towards the common goal of fully leveraging their respective strengths to create smart car products for customers."
Xiaopeng Automobile Announcement
On December 6, 2023, Xiaopeng Motors announced on the Hong Kong Stock Exchange that it had successfully issued 94.0793 million Class A common shares to Volkswagen Finance Luxembourg S.A., a subsidiary of Volkswagen. This means that the cooperation transaction between Xiaopeng and Volkswagen has been completed and delivered.
According to the announcement, the purchase price for each American depositary share in this transaction is $15 (calculated based on the exchange rate of HKD 7.8096 per share representing two Class A common shares and HKD 1 per share, equivalent to HKD 58.6 per share of Class A common shares). The total price of the subscribed shares is approximately $706 million. After deducting related costs and expenses, the net proceeds from Xiaopeng Motors are approximately $705 million (approximately RMB 5 billion).
After the completion of the transaction, among the A-class common shares, the proportion of nominee shares of Volkswagen Investment was 4.99%, and other shareholders accounted for 76.51%; 18.5% of Class B common shares, with a total of 1.885 billion shares. Volkswagen Group has obtained an observer seat on the board of directors of Xiaopeng Motors.
Xiaopeng Automobile Announcement
Xiaopeng Motors stated that it plans to use the net proceeds from the exchange for general corporate purposes, including meeting the company's operational capital needs.
On July 26, 2023, Volkswagen Group announced a technical cooperation framework agreement with Xiaopeng Motors. In the initial stage of cooperation, both parties will jointly develop two B-class electric vehicle models based on their respective core competitiveness and Xiaopeng Motors' G9 model platform, intelligent cockpit, and advanced driving assistance system software, to be sold in the Chinese market under the Volkswagen brand, and plan to enter the market in 2026.
Volkswagen Group China Official Website
In addition, both sides will explore other potential strategic cooperation in multiple fields, including future cooperation in electric vehicle platforms, software technology, and supply chain.
According to a research report by CITIC Securities, Xiaopeng has been adhering to the full stack self-development of intelligent driving for many years and has been exploring the mode of technology monetization. Cooperation with Volkswagen will help the company break through in technology monetization. It is expected that the recognition of technology service revenue will not only improve short-term profitability, but also open up the long-term ceiling.
According to public information, in the third quarter of 2023, Xiaopeng achieved a revenue of 8.53 billion yuan, a year-on-year increase of 25.0%; The net loss was 3.89 billion yuan, compared to a net loss of 2.38 billion yuan in the same period last year. On February 26, 2024, Xiaopeng Motors announced that it will release its fourth quarter financial report for 2023 on March 19. After the financial report is released, the company will hold a performance meeting at 20:00 Beijing time on the evening of the 19th.
As of February 28th local time, Xiaopeng Automobile's US stock closed at $8.725, a decrease of 6.98%, with a market value of $8.231 billion. Xiaopeng Automobile's US stock market rose by over 6% after market hours. As of press release, Xiaopeng Automobile's US stock market rose 4% after market hours.
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