Prepare Yourself for Another Huge Electric Vehicle IPO

Chinese electric vehicle manufacturer Xpeng announced Thursday a decision to increase the size of its U.S initial public offering (IPO) by more than a third after realizing Wall Street can swallow anything so long as it promises a greener tomorrow.

Co-founded in 2014 by two former executives from China’s GAC Group, the EV startup has already managed to produce around 20,000 vehicles for the Asian market. It also became engaged in an intellectual property dispute with Tesla (which claimed Xpeng stole its Autopilot source code) in 2019 and ran afoul with California’s Department of Motor Vehicles after failing to submit disengagement reports on its self-driving test vehicles in 2018.

Such hurdles don’t seem to have slowed the company’s rise to prominence, however. Xpeng is adept at fundraising, amassing well over a billion dollars through strategic partnerships in just the last two years. Meanwhile, the adjusted IPO filed on the New York Stock Exchange this August now targets a cool $1.5 billion USD.

It makes sense in the broader context. EV manufacturers frequently garner valuations that overshadow established automakers that are many times larger — and substantially more profitable. Xpeng itself only has two facilities located in China that produce its G3 sport-utility vehicle and brand-new P7 sedan. While we’ve never driven one (as it’s not sold in North America), the G3 has been praised for its build quality and impressive tech inclusions. Autocar even said it offered “near-Tesla levels of autonomous driving capability” in 2019.

There’s substantially less information floating around about the P7, but it’s clearly targeting the Tesla Model 3 and looks a lot like many other electric sedans we’ve seen debut in the last year or two. Porsche also helped develop the chassis, giving it some extra credibility as a performance model.

According to Reuters, Xpeng’s filing states that it will price its shares at $15 each. It originally suggested they’d go for between $11 to $13 when the deal was launched, however.

From Reuters:

The Guangzhou-based automaker had planned to sell 85 million American Depository Shares (ADS) but increased that to about 99.7 million shares following higher-than-expected demand from investors, according to the filing. Investors now value Xpeng at over $11 billion and its shares will start trading in New York on Thursday.

There is also a so-called greenshoe option in which another 14.96 million shares can be issued within the next 30 days that would allow Xpeng to raise a further $224.4 million.

BofA Securities, Credit Suisse, and J.P. Morgan. are joint bookrunners for the offering.

Xpeng CEO He Xiaopeng said the additional funding will be funneled into research and development and expanding sales. Vehicles (both future and present-day) are targeted between 150,000 yuan ($21,804) to 300,000 yuan to appeal to the market. Currently, that only includes China, though the business aspires to tackle both Europe and the United States.

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