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Xpeng Motors, a Chinese electric car manufacturer reportedly raised $400 million ahead of an initial public offering (IPO) in the United States adding onto $500 million that it raised in July.
Xpeng Motors, a Chinese electric car manufacturer reportedly raised $400 million ahead of an Initial Public Offering (IPO) in the United States. Reliable sources say that the Tesla (NASDAQ: TSLA) rival was in discussions to raise $300 million. However, another investor came on board bringing the total to $400 million. This amount is an add-on to $500 million that the firm raised in July.
Alibaba (NYSE: BABA) and the sovereign wealth fund Qatar Investment Authority have jumped on board as part of the $400 million funding exercise. Qatar Investment Authority is Abu Dhabi’s sovereign wealth fund Mubadala. The current funding round is nearing completion according to reports from sources familiar with the process.
Xpeng is undoubtedly raising capital while awaiting its IPO in the U.S. The Chinese firm has confidentially filed for a listing on Wall Street. However, it is yet to decide on what exchange it will take part.
The company’s Initial Public Offering exercise would follow other China-based electric carmakers like Li Auto (NASDAQ: LI) and Nio (NYSE: NIO) which have already listed in the United States and their share prices have risen steeply recently.
Trade Policy And Tension
Xpeng’s forthcoming IPO listing comes at a time when tension is rising between China and the US. This fact may eventually have an impact on the foreign firms that are trading on Wall Street. The U.S. Senate passed legislation in May to increase scrutiny on Chinese companies trading on American exchanges. That legislation carries the threat of delistings for some of the foreign firms.
China has seen the launch of many electric car makers due to its favorable policies including state subsidies. While some of these firms have shut down, several like Nio, Xpeng, and Li Auto are striving forward. They are pushing to get a segment of the world’s biggest electric car market.
In July, Xpeng Motors begun to deliver its new P7 sedan. This vehicle is considered to be a competitor to Tesla’s Model 3. In January, Tesla started rolling out this type of cars that are made in its Shanghai factory to users in China. Nonetheless, the COVID-19 pandemic has hit China’s electric vehicle industry significantly.
The so-called new energy vehicles’ sales plunged 33.1% year-on-year in June, according to the China Association of Automobile Manufacturers. Nonetheless, on a month-to-month basis, sales have been surging as the Chinese economy shows signs of a significant rebound.