Didi Sells Smart Auto Business To VW-Backed Xpeng In $744 Million Deal

In a major development, Chinese ride-hailing giant Didi is selling its smart electric vehicle unit to homegrown EV maker Xpeng in a deal worth $744 million. Xpeng, often referred to as the 'Tesla of China', has backing from automotive giant Volkswagen Group.

The deal was revealed in a stock exchange filing by Xpeng Motors, which is set to acquire Didi's smart EV development business. Under the agreement, Didi and Xpeng plan to launch a new EV brand in 2024 targeting the mass market segment under $20,000.

The joint project, currently under development with the code name 'Mona', will see Xpeng become the first automaker with comprehensive support from Didi's ride-hailing platform. The companies are exploring cooperation across areas like robotaxis, charging infrastructure, finance, insurance and even overseas expansion.

"As a world’s leading mobility technology platform, Didi shares Xpeng's vision of shaping the future mobility experience with technology. Our new A-class Smart EVs under the new brand will significantly increase scale and accelerate mass market adoption of our technologies," said Xpeng Chairman He Xiaopeng.

This is not the first collaboration between the two companies. In 2020, they partnered to launch Didi's Xiaomi Car rental service using Xpeng vehicles. Their charging networks are also connected.

The deal comes soon after Volkswagen invested $700 million for a 5% stake in Xpeng. VW and Xpeng have entered a strategic pact to co-develop two new EVs targeting the Chinese market.

With Didi's support, Xpeng seems poised to take on rivals like Tesla and Nio in the world's largest EV market. The new joint brand will allow it to expand its product portfolio and tap into Didi's vast user base for scaling up quickly.