China's Xpeng raises $1.5b in US IPO, soars on debut

The company is the third Chinese EV player to list in the US following Nio and Li Auto. It sold 99.7 million American Depository Shares (ADS) for $15 apiece, according to a statement. The prospectus originally put the offering at 85 million shares with a pricing range of $11-13. Xpeng’s stock opened at $23.10 and peaking at $25 before falling back to close at $21.22, a 41% premium to the IPO price.

Alibaba Group, an existing investor, expressed an interest in purchasing $200 million worth of stock in the offering. Meanwhile, Coatue Management, Qatar Investment Authority (QIA) and Xiaomi were willing to commit $100 million, $50 million, and $50 million, respectively.

Alibaba participated in a funding round for Xpeng earlier this month, a matter of days before the company filed for its IPO. The Chinese internet giant put in $225 million, with Mubadala Investment and QIA each putting in $100 million. This came shortly after a $500 million extended Series C round featuring Aspex Management, Coatue, Hillhouse Capital, and Sequoia Capital China.

The extension took Xpeng’s entire Series C round to $900 million and its overall funding to about $2.7 billion. The company was established as recently as 2015 when longstanding Tesla fan Xiaopeng He sold web browser UCWeb to Alibaba and backed an EV development team that spun out from Guangzhou Automotive Industry Group. The new entity was subsequently named Xpeng. He was concurrently serving as head of Alibaba’s mobile internet division.

The company launched the G3, an SUV, in November 2018. The P7, a four-door sports sedan with a longer single-charge driving range than any other China-made EV, followed in May. As of July, Xpeng had delivered 18,741 units of the G3 with a retail price of about RMB150,000 ($21,700) and 1,966 units of the P7, priced at about RMB300,000.

Xpeng emphasizes smart functions and over-the-air (OTA) updates. It has a goal of bringing new features to users every month through OTA iteration. The G3 achieved a utilization rate of 51% for the assisted parking function as of March. Xpeng claims this is much higher than the single-digit industry average.

“I like Tesla, but I don’t think Tesla is in line with China’s local conditions,” He told an automobile summit in Guangzhou in January. “In China’s large cities, parking spaces are often small and difficult to park in. Car companies can continuously improve the success rate and ease of use of automatic parking through OTA iteration. On this, Tesla did not actually do much.”

The company’s revenue rose from RMB9.7 million in 2018 to RMB2.32 billion in 2019. For the first half of 2020, revenue came to RMB1 billion, down 17% year-on-year. This was attributed in part to the COVID-19 outbreak curtailing deliveries. Its net loss widened from RMB1.4 billion in 2018 to RMB3.7 billion in 2019. For the first six months of 2020, the loss was RMB795.8 million.

Following the IPO, Alibaba remains the largest external shareholder with a 12.7% stake, followed by IDG Capital with 5.5%, Morningside Venture Capital on 3.7%, GGV Capital on 3.3%, Centurium Capital on 3.1%, and Primavera Capital Group on 2.8%. He has a 27.8% equity interest but a 58.2% voting stake because of the multi-share class structure.

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• Topics
• Greater China
• IPO
• Technology
• China
• automobiles
• Alibaba Group
• Xiaomi
• Qatar Holdings
• Coatue Management
• IDG capital
• Morningside Technologies
• GGV Capital
• Centurium Capital