Alibaba-Backed EV Maker XPeng Soars On NYSE Listing; CEO He Xiaopeng Worth $4.2 Bln

Shares in China electric vehicle maker XPeng, whose investors include Internet heavyweight Alibaba Group and Beijing smartphone supplier Xiaomi, soared by 41% from their IPO price on their debut at the New York Stock Exchange today.  That big gain made the company’s CEO one of the richest men in the global auto industry.

He Xiaopeng, 42, who earlier in his career made a fortune by co-founding a mobile browser business in China, holds Xpeng shares worth$4.2 billion, based on figures in the company’s prospectus.

Xpeng’s IPO follows the June 30 Nasdaq listing of another China EV maker, Li Auto, which raised $1.1 billion and whose shares have risen since. They plunged 17% to $19.38 today, but are still far above their $11.50 IPO price. Xpeng’s offering – at $15 per American Depositary Share—and successful listing follows U.S. stock gains by Tesla and China-based Nio amid investor optimism about the market for EVs, smart cars and autonomous driving vehicles.

XPeng, headquartered in the southern Chinese city of Guangzhou, was 31% controlled by CEO He Xiaopeng and 14% owned by Alibaba prior to its IPO. Among its well-known investors, XPeng was 6% owned by funds associated with IDG, 4% by Morningside-related funds, and 3.8% by GGV funds. Smartphone maker Xiaomi holds a stake, and in July, XPeng raised $900 million from a group of investors including Aspex, Coatue, Hillhouse Capital, Sequoia Capital China, the Qatar Investment Authority, and Mubadala, an Abu Dhabi sovereign wealth fund.

In the first six months of this year, XPeng’s revenue of $141 million wasn’t far from its losses of $112 million.  Yet XPeng says it has reached several milestones in 2020, despite the impacts of Covid-19, including launching its second Smart EV model, the P7 sports sedan – in April, and obtaining a production license for its self-built, fully-owned factory in in Guangdong Province in May.

XPeng is focused on the world-leading China auto market, where passenger vehicle sales totaled 21.1 million units in 2019, according to IHS Markit Report figures cited in Xpeng’s filing. The penetration rate of EVs in the passenger vehicle market was 4.2%, or about 893,700 units, in 2019; the market is to grow by 29.4% annually in 2019-2025 to reach 4.2 million units, representing 16.2% of China’s passenger vehicle market, according to the IHS Markit Report.

In-vehicle technology functions are among the most important factors to Chinese consumers when they make vehicle purchase decisions, the prospectus says. That fits in with XPeng’s techie roots and aim to sell autonomous driving vehicles. In addition, China’s government has announced a plan to achieve a penetration rate of 30% for smart and connected vehicles among total vehicle sales by 2025, it said.

He, who held a fortune worth $1.2 billion in the 2020 Forbes Billionaires List published earlier this year, was previously co-founder of browser UCWeb, which was acquired in full by Alibaba in 2014, as well as an Alibaba executive. Other XPeng co-founders, Xia Heng and He Tao, were senior executives of Guangzhou Automobile Group, a large government-controlled automaker.

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@rflannerychina