XPeng enters into cooperation agreement for new smart EV manufacturing base in Guangzhou; $586M in financing
Chinese EV contender XPeng announced that its wholly owned subsidiary in China, Guangdong Xiaopeng Motors Technology Co., Ltd. entered into a cooperation agreement with Guangzhou GET Investment Holdings Co., Ltd., a wholly owned investment company of Guangzhou Economic and Technological Development Zone.
According to the terms of the Cooperation Agreement, Guangzhou GET Investment agrees to provide RMB 4 billion (US$586 million) in financing to help fuel XPeng’s growth as well as support the construction of a new smart EV manufacturing base for XPeng in the Guangzhou Economic and Technological Development Zone.
In addition to its wholly owned plant in Zhaoqing, Guangdong province, which has an annual production capacity of 100,000 units, XPeng’s new Smart EV Manufacturing Base in Guangzhou will significantly expand the company’s production capacity and accelerate XPeng’s momentum to achieve its goals in innovation, technological advancement and growth.
Under the Cooperation Agreement, Guangzhou GET Investment will invest up to RMB 1.3 billion (US$191 million) to construct the smart EV manufacturing base according to design requirements and specifications to be provided by Guangdong Xiaopeng. The manufacturing base is expected to commence production by December 2022, upon which Guangzhou GET Investment will lease it to an operating subsidiary of Guangdong Xiaopeng for a tenure of seven years. Upon the expiry of the lease, the operating subsidiary will acquire the Smart EV Manufacturing Base from Guangzhou GET Investment at costs incurred by Guangzhou GET Investment.
Pursuant to tagreement, Guangzhou GET Investment also agreed to provide or facilitate RMB 1.2 billion (US$176 million) in financing to the operating subsidiary for its purchase of manufacturing equipment in the form of fixed-return redeemable investment (with an annualized return of 4%) or long-term bank loans that Guangzhou GET Investment will help the operating subsidiary to secure with effective annual interest rates of no more than 4%, after subsidies that are expected to be made available by the local government.
The new Smart EV Manufacturing Base will provide a comprehensive range of facilities for R&D, manufacturing, vehicle testing, sales and other smart mobility functions.
In addition, Guangzhou GET Investment agreed to make investment of RMB 1 billion (US$147 million) in a PRC entity to be designated by Guangdong Xiaopeng by the end of March 2021. Guangzhou GET Investment also reserved previously approximately RMB 0.5 billion (US$73 millioon) for participation in securities offerings by XPeng, and approximately half of the amount is still available for additional investments in XPeng before the end of August 2022.
Early in August, Xpeng reported closing a US$900-million C+ financing round. The company announced its Series C funding round of US$400 million in November 2019.