Tech

A Tesla rival in China wants at least $500 million in funding, and it may try a US IPO

Key Points
  • The electric carmaker is also seeking at least $500 million in funding, said CEO He Xiaopeng.
  • Founded in 2014, it is one of the many electric car companies that have sprung up in the last few years, as Beijing continues its push for so-called new energy vehicles.
Xpeng Motors Technology headquarters in Guangzhou, China
Giulia Marchi | Bloomberg | Getty Images

Xpeng Motors, a Chinese rival to Tesla, is seeking at least $500 million in funding and separately looking at a public listing, possibly in the United States, its CEO He Xiaopeng told CNBC on Wednesday.

Founded in 2014, it is one of the many electric car companies that have sprung up in the last few years, as Beijing continues its push for so-called new energy vehicles.

Xpeng began delivery of the G3 SUV — its first car to consumers in China — in December. It has a base price of 227,800 yuan ($33,916).

Speaking to CNBC at the Boao Forum in China, He said the factory — which is owned by another carmaker called Haima — has increased production from 1,000 vehicles, to at least 3,000, a month. The CEO said his goal is to deliver 10,000 cars by July.

Ultimately, Xpeng Motors wants to be able to manufacture 1,000 of the SUVs a week and produce 40,000 this year.

In comparison, Tesla produced 86,555 vehicles in the fourth quarter alone, although the U.S. carmaker undoubtedly produces more models and has been in operation since 2003.

Xpeng is also gearing up for the launch of a new car, codenamed E28, at the Shanghai Auto Show next month. It is expected to rival Tesla's Model 3.

He told CNBC it would be sold in the middle of a $25,000 to $50,000 range, with the final pricing to be revealed by the end of the year. It will start shipments in 2020.

IPO ahead

With this intensive expansion, He said the company would look to raise more money.

"We are actively looking at (the) next round of funds," the chief executive told CNBC, adding that it would be $500 million or more in both equity and debt.

The money could be used to ramp up production, including in its own factory which it is currently building. He said the company is targeting completion of that facility by September of this year, then in the second quarter of 2020 it will produce cars on a "big scale."

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So far, Xpeng Motors has raised $1.3 billion in funding, according to data from Crunchbase, with backers including e-commerce giant Alibaba and Foxconn.

Even though the next round of funding is likely to come from the private markets, He said an initial public offering (IPO) may not be far off.

"Yes, we do have IPO plans. We are open to a listing either overseas or at home in China. We want to focus building our business first before considering the IPO," He told CNBC.

"The auto industry is capital intensive, and at the same time, has strict requirement for operation and efficiency. We want to focus on getting more orders and delivering the cars this year and next, before we start considering going public."

He added that while a final location for the public listing has not been decided, and a U.S listing will likely happen before one on the mainland.

"We are on the fence for the U.S. and tech board listing. For Xpeng, we hope to do both. Tech board is a good option. We will keep monitoring it. It is possible that our U.S. listing will happen sooner," Xiaopeng said.

"Tech board" refers to a Nasdaq-style listing location in Shanghai that is aimed at attracting high-tech companies.

If Xpeng Motors lists in the U.S., it would be following in the footsteps of rival electric vehicle maker NIO, which went public on the New York Stock Exchange last year.

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Clarification: This report has been updated to more clearly reflect the factory opening and production timeline.

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