China’s Xpeng Motors to raise up to $2 billion in Hong Kong IPO

An XPeng Motor P7 electric vehicle will be available for sale on May 9, 2021 at Wanda Plaza in Beijing, China.

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GUANGZHOU, China – U.S.-listed Chinese electric car maker Xpeng Motors has been given the green light to go public in Hong Kong that could raise between $ 1 billion and $ 2 billion, a source close to the matter told CNBC.

It comes as China’s electric vehicle market becomes increasingly competitive.

The Hong Kong Exchanges and Clearing Exchange Committee gave Xpeng the green light, added the source, who had no authority to speak publicly on the matter.

Xpeng is already listed in New York. The Hong Kong IPO will be a little unusual.

While Chinese companies listed in the USA such as Alibaba and JD.com have already come to Hong Kong to carry out so-called secondary listings, Xpeng will carry out a dual primary listing.

This means that it is subject to the rules and supervision of both the US and Hong Kong regulators, which is not the case with a secondary listing.

But it also means the Guangzhou-based electric car maker will be part of the “Stock Connect” program, which will allow mainland Chinese investors to buy shares in the company. This could potentially enlarge the pool of investors.

JPMorgan Chase and BOFA will be the main banks facilitating the listing, the source said.

Xpeng Motors declined to comment when contacted by CNBC.

Read more about electric vehicles from CNBC Pro

Plans to raise funds in Hong Kong come as US-China tensions continue to threaten Wall Street-listed companies. The US Securities and Exchange Commission passed rules earlier this year that impose stricter examination requirements for foreign companies listed in America. It carries the risk of delisting for companies that do not adhere to it.

But Xpeng is also raising money to compete in an increasingly crowded electric car market in China. It is not only faced with traditional automakers looking to increase their market share in electric cars, but also with market leader Tesla and domestic startups like Nio and Li Auto. The latter two are also listed in the USA

Xpeng said it shipped 5,686 cars in May – a 483% increase from last year and a 10% increase from the previous month, faster than in April. The company plans to deliver between 15,500 and 16,000 units in the second quarter.

In April, Xpeng launched the P5, its third production model and second sedan after the P7. The company is focused on improving its technology including some autonomous driving features to differentiate itself from its competitors.

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