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China’s Xpeng electric starter has received a $ 2 billion loan

Xpeng CEO He Xiaopeng stands next to the company’s P7 electric sedan as he addresses the media at the Beijing Motor Show in 2020.

Evelyn Cheng CNBC

In July 2020, local branches of four of the Big Five banks provided a 10.4 billion yuan loan to Nio for start-up Chinese operations based in the city of Hefei near Shanghai. Participants in the deal include the China Construction Bank, the China Industrial and Commercial Bank, the China Bank and the China Agricultural Bank, Nio said in a statement.

In the Chinese state system, banks prefer to lend to state-owned enterprises. This makes it difficult for private companies to obtain financing unless they can convince state-owned banks of their ability to repay loans.

The announcement of Xpeng̵

7;s credit line comes after the company raised more than $ 4 billion last year in its initial public offering on the New York Stock Exchange in August and a subsequent offer in December.

Shares jumped more than 195% after the IPO.

Where does the money go?

The start-up did not disclose details about the terms of the loan on Tuesday. The agreement will help the Guangzhou-based company expand its production, sales and services and other operations, the statement said.

Xpeng said it began building a second factory in November. The company said it had opened 116 retail storefronts and 50 service centers as of Sept. 30. And Xpeng revealed in September that it was investing in the development of flying vehicles.

Last year, deliveries totaled 27,041, with more than half coming from the new P7 sedan, which began mass deliveries in late June. The company added that it delivered 100 units of its G3 SUV to customers in Norway in December.

Although total shipments have more than doubled since a year ago, Xpeng figures are less than more than 43,700 Nio shipments. Nio cars are aiming for a higher end of the market, while the Xpeng’s price range is lower.

In the last 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 that its sedan will begin shipping later this year.

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