Chinese electric carmaker bucks trade war trend by applying for US listing

Electric car maker Xiaopeng, which operates under the brand Xpeng, appears to be going ahead regardless with a bid to list in New York despite moves to delist foreign companies that fail US accounting standards

Chinese electric carmaker bucks trade war trend by applying for US listing
A woman walks by an Xpeng Motors showroom at its headquarters in Guangzhou, Guangdong province on May 18, 2020. Photo: Yilei Sun / Reuters.

(ATF) Little known Chinese electric car maker Xiaopeng, which operates under the brand Xpeng, appears to be going ahead regardless with an application to list on the New York Stock Exchange – despite moves by the Trump administration to delist any foreign companies that fail US accounting standards after 2022.

Xiaopeng Motors received more than US$300 million in financing from backers such as Alibaba Group, which led a recent round of financing, and Qatar Sovereign Fund (QIA). And the group is less than half a month away from nearly $500 million in a further round of fundraising. 

Xpeng is committed to manufacturing "smart" electric vehicles through advanced self-developed technologies. They have only sold about 20,000 vehicles to date, and recent media reports in China point to a battery fire – an online video showed that a Xiaopeng G3 "spontaneously ignited" in Guangzhou, and a lot of smoke was emitted at the scene. Firefighters were in place quickly.

The move to list currently, amid a trade war between the US and China and heightened scrutiny of Chinese companies listing on US stock markets – which appears to caused some firms to opt out and list in either Hong Kong or Shanghai instead – has people scratching their heads, wondering why has this small player in China's auto sector made a move to list in New York.

The full answer to that question is not fully known. Part of it appears to stem from intense competition within China, where the government has shown great interest in electric vehicles. 

On July 20, Xiaopeng Automobile announced the completion of the C+ round of financing involving well-known investment institutions such as Aspex, Coatue, Hillhouse Capital and Sequoia China, with a financing amount of nearly US$500 million. And in November 2019, Xiaopeng Motors announced that it had received US$400 million in Series C financing.

As the C+ round of financing continues to accumulate, Xpeng/Xiaopeng Motors' IPO process in the United States is also accelerating. 

According to analysis by China’s Chief Observer group Xiaopeng’s designs are about five years out of date, and the IPO is seen as a way to give it a boost against competitors Hengqi and Weilai.

But all three of these companies are also up against Tesla in their domestic market and all will compete with localised pricing. Tesla chief Elon Musk has also got into bed with China’s powerful Evergrande group.

The three Chinese firms are all trying to find a market niche – Xiaopeng/Xpeng appears to be focusing on after-sales service. It has also developed an Xpilot autopilot system and is constantly upgrading this self-drive function. It is possible that some of their funding partners see this brand as a good bet.

ALSO SEE: Chinese firms that fail US accounting standards to be delisted as of 2022 

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