Xpeng CEO He Xiaopeng stands next to the company’s P7 electric sedan while speaking to the media at the 2020 Beijing automotive show.
Evelyn Cheng | CNBC
In July 2020, local branches for four of the “big five” banks expanded 10.4 billion Yuan in credit to Nio for China’s start-up operations based in the city of Hefei near Shanghai. Participants in this contract included the Construction Bank of China, the Industrial and Commercial Bank of China, the Bank of China and the Agricultural Bank of China, according to a statement from Nio.
In China’s state-controlled system, banks prefer to lend to state-owned enterprises. That makes it difficult for private companies to get money, unless they can convince the state – owned banks that they are capable of repaying loans.
The news of Xpeng’s line of credit comes after the company raised more than $ 4 billion last year in its first public offering on the New York stock exchange in August and a follow-up offer in December.
Shares have risen more than 195% since the IPO.
Where does the money go?
The startup business did not release details of credit terms on Tuesday. The agreement will help the Guangzhou-based company expand its manufacturing, sales and other services and operations, according to a press release.
Xpeng said it began construction of a second factory in November. The company said it has opened 116 retail store fronts and 50 service centers, as of Sept. 30. And Xpeng revealed in September that it is investing in the development of flying vehicles.
A total of 27,041 came in last year, with more than half coming from a new P7 sedan that began mass delivery at the end of June. The company added that it would deliver 100 units of its G3 SUV to customers in Norway in December.
While total deliveries more than doubled from a year ago, Xpeng’s figures were not as short as Nio’s more than 43,700. Nio vehicles have focused on the higher 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 says its sedan will start delivery later this year.