China-based maker of high-tech electric vehicles Xpeng sees shares rise more than 40 percent amidst heavy investor demand driven by Tesla share surge
Chinese electric carmaker Xpeng saw its shares rise more than 40 percent on their New York stock market debut, as sharp rises in Tesla’s share price stir investor enthusiasm for the sector.
Xpeng’s public offering on the New York Stock Exchange made the company’s chief executive, He Xiaopeng, a former Alibaba executive, one of the richest men in the global automobile industry.
He, who earlier made a fortune by co-founding a mobile browser business in China that was later acquired by Alibaba, holds Xpeng shares worth $4.2 billion (£3.2bn), according to the company’s prospectus.
The offering comes amidst a meteoric rise in the share price of rival electric carmaker Tesla, which has never turned a profit, as investors look for companies that stand to benefit from rising demand for electric vehicles.
Tesla’s share price rise of more than 1,000 percent over the past 12 months made it more valuable than Toyota in market terms on 1 July and recently made chief executive Elon Musk’s personal fortune worth more than $100bn.
Xpeng’s shares rose 41 percent to close at $22 on Thursday, before rising a further 7 percent on Friday, finishing the day at $22.79.
The rise came after Xpeng, which is backed by Chinese e-commerce giant Alibaba, said earlier in the week it would expand its offering due to heavy demand. Other backers include smartphone maker Xiaomi and a range of venture-capital funds.
The offering raised $1.5bn and valued Xpeng at more than $10bn. Xpeng said it would use the funds to expand sales and charging infrastructure, invest in autonomous driving software and launch a third model by the end of next year.
Xpeng rival Li Auto, a maker of electric sport-utility vehicles that is also based in China, has also tapped US markets in recent weeks, raising $1.5bn on the Nasdaq in July.
Xpeng, founded in 2015, sells technology-heavy vehicles that include voice-activated interior controls and self-driving features.
The company’s two models, which are currently sold only in China, have a range per battery charge comparable to Tesla’s cars, but at a lower price.
Tesla also manufactures vehicles in China, and some industry watchers see Xpeng as vulnerable to price competition as the California-based company introduces lower-priced models.
The IPO’s underwriters included JPMorgan, Credit Suisse and Bank of America.