Shares in Chinese electric vehicle maker Xpeng Motors rose more than 40 percent on its New York debut, as a boom in Tesla shares prompted the country’s startups to accelerate their expansion plans.
Xpeng, backed by e-commerce group Alibaba, rose as much as 67 percent on the New York Stock Exchange on Thursday before reducing some of those earnings to $ 22 per share.
The jump came after the company increased the size of its IPO this week due to high demand, which raised $ 1.5 billion and valued Xpeng at more than $ 10 billion.
Xpeng is the second Chinese EV maker to enter US markets in recent weeks after rival Li Auto, which sells hybrid sport utility vehicles, also raised $ 1
Concerns about the ability of EV startups to control costs and scale in the face of fierce competition have been overwhelmed in recent months by investor desire not to miss the next Tesla. The California-based group’s share price is up nearly 1,000 percent in the past 12 months, helping to overtake Toyota as the world’s largest automaker in terms of market capitalization.
Xpeng was founded in 2014 and is run by Chinese entrepreneur and former Alibaba manager He Xiaopeng. Mr Hee’s record and the company’s technical prowess has led analysts to name the company as one of China’s leading potential challengers to Tesla, the industry leader in electric vehicles.
The Guangzhou-based group acts as a manufacturer of “intelligent” premium electric cars. The technology-laden vehicles offer automated driving functions and the distance they can travel on a single battery charge is comparable to that of Tesla, but at a lower cost.
Jixun Foo, managing partner at GGV Capital and former investor in Xpeng, admitted that the EV sector is benefiting from a “Tesla halo”.
But he added that startups’ growth potential would be determined by their ability to compete with traditional automakers rather than EV competitors. “Most gamers are talking about tens of thousands of units a year compared to a 20 million unit market,” said Foo.
Xpeng said the funds raised as part of its IPO would be used to expand its retail and charging infrastructure, invest in autonomous driving software, and bring a third model to market by the end of 2021.
However, some analysts anticipate a threat to Xpeng from cheaper Tesla models in China, such as the locally made Model 3.
“Xpeng’s lower prices. . . means that it will be faced with the task of selling its cars to more price sensitive consumers and that it will face more price competition from larger competitors [carmakers]”Said Bernstein in a note in front of the float.
Xpeng’s listing was heavily oversubscribed by investors. The company sold 99.7 million US shares for $ 15 each, well above its previous target of $ 11-13 per share.
According to one person with knowledge of the business, there was “significant long-only” participation from investors related to the interests of large long-term investors.
The bookrunners on the deal included JPMorgan, Credit Suisse and Bank of America.