AutoBeta(AutoBeta.net)03/21 Report--

Taobao China Holdings Co., Ltd., a subsidiary of Alibaba, plans to sell 33 million American depositary shares (ADS) of Xiaopeng Motor, with a total value of about $314 million (2.261 billion yuan), below the market price, according to Securities and Exchange Commission filings.

On the evening of March 19, Xiaopeng announced on the Hong Kong Stock Exchange that Taobao China, he Xiaopeng and the company signed a written agreement based on voluntary negotiations. According to the agreement, Taobao China, he Xiaopeng and the company confirmed and agreed that the relevant agreement will be terminated from March 19, 2024 and will no longer have any effect. The company will continue to cooperate with Alibaba Group in many areas such as R & D and marketing services, and will explore new business cooperation opportunities in the future. The board of directors of the company announces that Ms. Hu Xiao has tendered her resignation as a non-executive director of the company with effect from 19 March 2024 to devote more time to her other business affairs and termination based on the above agreement. It is understood that Hu Xiao is currently the Managing Director of the Strategic Investment Department of Alibaba Group.

It should be noted that this is not the first time Alibaba Group has reduced its holdings of Xiaopeng cars. In December 2023, Alibaba sold 25 million ADS shares of Xiaopeng Motor, totaling about $391 million, reducing his shareholding from 12.49% to 9.24%.

With this substantial reduction, it means that Xiaopeng Motor and Alibaba's Taobao China have terminated the director appointment agreement. He Xiaopeng, chairman and CEO of Xiaopeng Motor, said: "on behalf of our board of directors and management team, I would like to thank Alibaba Group for its long-term support to Xiaopeng Motor. We look forward to continuing in-depth cooperation with Alibaba's AI technology innovation ecology."

Xiaopeng Motor is one of the leading car manufacturers in China, founded in 2014 and headquartered in Guangzhou. It was originally co-founded by he Xiaopeng, Xia Heng, he Tao and others. He Xiaopeng, former founder of UC and president of Ali Mobile Business Group, is one of the earliest investors in Xiaopeng Automobile.

Alibaba has a deep relationship with Xiaopeng Automobile. He Xiaopeng joined Xiaopeng Motor as chairman after leaving Alibaba in August 2017. In August 2020, Xiaopeng Motor was officially listed on the New York Stock Exchange under the symbol "XPEV". Before Xiaopeng Motor landed in the United States, Xiaopeng Motor experienced three rounds of financing: A0, A1, A2 financing, A0 round from Alibaba Group and he Xiaopeng himself; A1 round for GGV Capital, Morningside Capital, IDG, Jingwei Capital, Shunwei Capital and Light Control Capital; and A2 round for Xinding Capital, Kunzhong Capital and Lightspeed Venture Capital. According to the prospectus, the former management of Xiaopeng Motor of IPO holds 40.9% of the shares, with he Xiaopeng holding 31.6% as the largest shareholder and Ali holding 14.4% as the largest external shareholder. Alibaba is also the company's second-largest shareholder since Xiaopeng's US stock listing, holding more than 10 per cent of Xiaopeng through Taobao China. In August 2023, Xiaopeng established a strategic cooperation with Volkswagen, and Volkswagen is currently Xiaopeng's third largest shareholder.

Alibaba's repeated reduction of his stake in Xiaopeng has also raised concerns about the future of Xiaopeng, a move that analysts believe may herald pessimistic expectations for Xiaopeng's future development.

At present, Xiaopeng Motor is not doing well in financial terms. Financial data show that Xiaopeng's revenue in 2023 was 30.68 billion yuan, an increase of 14.2% over the same period last year; the net loss was 10.38 billion yuan, an increase of 13.57% over the same period last year; and the gross profit margin was negative 1.6%. In response, Xiaopeng said that increased promotion efforts, the decline of subsidies for new energy vehicles, and losses on inventory provisions and procurement commitments related to the upgrading of G3i and existing models are the key reasons for the decline in its gross profit margin. In terms of delivery volume, Xiaopeng Motor has also performed very mediocre in the past 2023, delivering a total of 142000 vehicles in 2023, achieving only 70 per cent of the annual target of 200000.

He Xiaopeng pointed out in a recent open letter that 2024 is the first year for Chinese car brands to enter the "sea of blood" competition, and it is also the first year of the knockout stage. This year has been a challenging year for Xiaopeng. According to the plan, Xiaopeng Motor will launch 100000 to 150000 yuan of brand A products worldwide within a month, and put the AI model into the car in the second quarter. As for this year's goal, he Xiaopeng said bluntly: "the performance should be more than doubled, the organization should supplement and complete all the shortcomings, and the management should begin to take the first step towards high quality." It is expected that the annual sales target will exceed 280000 vehicles, which means that about 23000 new vehicles will need to be delivered each month according to the annual sales target of 280000 vehicles.

Or affected by this news, Xiaopeng Motor Hong Kong shares fell sharply on March 21, falling more than 7% at one point. As of March 21, Xiaopeng Motor Hong Kong shares fell 6.54% to 37.90 Hong Kong dollars per share.

Welcome to subscribe to the WeChat public account "Automotive Industry Focus" to get the first-hand insider information on the automotive industry and talk about things in the automotive circle. Welcome to break the news! WeChat ID autoWechat