Chinese electric car start-up Xpeng will receive $ 2 billion in credit

In July 2020, local branches of four of the “big five” banks provided 10.4 billion yuan in credit to Nio for the start-up’s Chinese operations in Hefei city 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 lending to state-owned companies. That makes it difficult for private companies to get funding unless they can convince the state-owned banks of their ability to repay loans.

The announcement of Xpeng’s line of credit comes after the company raised more than $ 4 billion last year on its first public offering on the New York Stock Exchange in August and a follow-up offering in December.

Shares have risen by more than 195% since the IPO.

The start-up did not disclose details about credit terms on Tuesday. The agreement will help the Guangzhou-based company expand its manufacturing, sales and services and other businesses, according to a press release.

Xpeng said it began construction of a second plant in November. The company said it has opened 116 storefronts and 50 service centers as of September 30. And Xpeng revealed in September that it is investing in the development of flying vehicles.

Deliveries reached 27,041 last year, more than half of which came from a new P7 sedan that began mass deliveries in late June. The company added that it delivered 100 units of its G3 SUV to customers in Norway in December.

While total deliveries have more than doubled from a year ago, Xpeng’s numbers lagged Nio’s more than 43,700 deliveries. Nio’s vehicles were aimed at the higher end of the market, while Xpeng’s price range was 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.