He Xiaopeng, CEO of Xpeng, stands next to the company’s P7 electric sedan speaking to the media at the 2020 Beijing Auto Show.
Evelyn Cheng | CNBC
In July 2020, local branches of four of the “Big Five” banks granted Nio 10.4 billion yuan in loans for the startup’s China activities in Hefei near Shanghai. Participants in this deal included China Construction Bank, Industrial and Commercial Bank of China, Bank of China and Agricultural Bank of China, according to an announcement by Nio.
In China’s state-dominated system, banks prefer to lend to state-owned companies. This makes it difficult for private companies to obtain funding unless they can 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 from its IPO on the New York Stock Exchange in August and a follow-up offering in December.
Shares have risen more than 195% since going public.
Where is the money going?
The start-up did not reveal details of the loan terms on Tuesday. The agreement will help the Guangzhou-based company expand its manufacturing, sales, service and other activities, according to a press release.
Xpeng said it started building a second factory in November. The company opened 116 retail stores and 50 service centers as of September 30. Xpeng announced in September that it was 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 shipped 100 units of its G3 SUV to customers in Norway in December.
Although total deliveries have more than doubled compared to the previous year, Xpeng’s numbers fell short of Nio’s more than 43,700 deliveries. Nio’s vehicles have hit the high end of the market while Xpeng’s price range has been lower.
In the past two weeks, both companies have announced plans for new sedans. Nio’s is expected to arrive in the first quarter of next year. Xpeng claims its sedan will be delivered later this year.