Chinese electric vehicle upstart Xpeng is acquiring the smart EV assets of ride hailing giant Didi for $744 million, marking another significant alliance that the Tesla challenger has struck in recent months.

In an announcement on Monday, Didi said the duo is forming a strategic partnership to “promote the global application of smart electric vehicles and technologies.”

Notably, the Didi assets will become a new sub-brand called “Mona” under Xpeng, which is scheduled to launch in 2024. The partnership also extends to areas including marketing, financial insurance services, charging and international expansion.

The news followed on the heels of Volkswagen’s $700 million investment in Xpeng which would see the production of two new models under the Volkswagen brand utilizing XPeng’s key ADAS technologies.

Xpeng’s mass market ambitions

Despite spending heavily on R&D, Xpeng’s EV adoption remains quite limited, making up just 2.1% of China’s new energy vehicle market (including hybrids) in 2022. A partnership with Didi could potentially help it tap hundreds of millions of users in China.

For the 12 months ended Q1 2023, Didi recorded 587 million active users. Imagine that these passengers, when picking their ride on the Didi platform, see Xpeng’s Mona model served up as a preferred option in the future. Didi’s footprint reaches beyond China with its acquisition of the Brazilian rideshare company 99 back in 2018, which has given it a boost in Latin America.

Indeed, Xpeng acknowledges in its filing with Hong Kong’s securities authority that the partnership “will increase the Company [Xpeng]’s brand exposure and customer reach through the Seller’s platform, which will in turn result in more business leads and unfold business opportunities for the Company in new international markets.”

More to come — this is a developing story…