Tuesday, September 29, 2020

China Joins Electric Vehicle Fundraising Gold Rush

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News Analysis

Chinese electric vehicle (EV) manufacturer Xpeng priced its initial public offering on Aug. 26 and subsequently saw its stock price surge more than 50 percent above its IPO price by Friday, becoming the latest EV maker to see its shares skyrocket in recent weeks.

Everything EV has gone hyperbolic in 2020. Nevermind a recession or a virus pandemic—Tesla Inc., the biggest name in the industry, has seen its shares soar more than 400% percent since Jan. 1. It is now the world’s most valuable automaker by market capitalization. Xpeng’s fortuitous timing of its IPO means it just became the latest company to ride the EV high tide.

Guangzhou-based Xiaopeng Motors (commonly known as Xpeng) sells EV models in China and competes with Tesla as well as other domestic Chinese EV makers such as NIO and Li Auto. Xpeng has also developed its own autonomous driving capabilities. Its IPO was priced at $15 per share, above the initial expected range, raising approximately $1.5 billion on the New York Stock Exchange.

EV Industry High Tide

EV stocks have been on fire this year, propelling Tesla to become the world’s most valuable automaker despite meager profits. Market capitalization changes daily, but as of Aug. 28 Tesla’s value of $412 billion is worth around twice as much as the world’s second-most valuable automaker, Japan’s Toyota.

Tesla’s success has spurred a spate of new fundraising for EV makers. The highest profile was Arizona-based EV startup Nikola Motors, which merged with a special-purpose acquisition company (SPAC) called VectorIQ in June to become a publicly traded company. And despite showing no revenues, Nikola’s stock closed at $41.35 on Aug. 28, giving the company a $15.6 billion valuation.

Nikola’s success story—financially, if not businesswise—has led several other EV makers to pursue public listings via SPACs. Other EV companies merging with SPACs include Fisker, Canoo, and Lordstown Motor, all of which announced transactions in July or August 2020.

This is the environment the Alibaba-backed Xpeng has chosen to sell its…

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