Xpeng CEO He Xiaopeng stands beside the company’s P7 electric sedan while speaking to the media at the Beijing 2020 Auto Show.
Evelyn Cheng | CNBC
In July 2020, local branches of four of the “big five” banks provided Nio with 10.4 billion yuan in credit for the start-up’s operations in China based in the city of Hefei, near Shanghai. Participants in this agreement included China Construction Bank, China Industrial and Commercial Bank, Bank of China and Agricultural Bank of China, according to an announcement by Nio.
In the state-dominated system of China, banks prefer to lend to state-owned companies. This makes it difficult for private companies to obtain financing unless they are able to convince state banks of their ability to repay loans.
Xpeng’s credit line announcement comes after the company raised more than $ 4 billion last year in its initial public offering on the New York Stock Exchange in August and a subsequent offering in December.
The shares have risen more than 195% since the IPO.
Where is the money going?
The start-up did not release details about credit conditions on Tuesday. The deal will help the Guangzhou-based company expand its manufacturing, sales and services and other operations, according to a statement.
Xpeng said it started building a second plant in November. The company said it opened 116 retail stores and 50 service centers by September 30. And Xpeng revealed in September that it is investing in the development of flying vehicles.
Deliveries totaled 27,041 last year, with more than half coming from a new P7 sedan that began mass deliveries in late June. The company added that it delivered 100 units of its G3 SUV to customers in Norway in December.
Although general deliveries have more than doubled over the previous year, Xpeng’s numbers have fallen short of more than 43,700 deliveries by Nio. Nio’s vehicles target the upper segment of the market, while the Xpeng price range has been smaller.
In the past two weeks, the two companies have announced plans for new sedans. Nio’s should arrive in the first quarter of next year. Xpeng says his sedan will start shipping later this year.