Shares of Xpeng Motors climbed more than 5% in Tuesday’s pre-market session after the Chinese electric vehicle company secured a RMB12.8 billion ($2 billion) credit line.
Xpeng (XPEV) said that it signed a strategic cooperation agreement with leading commercial domestic banks, including the Agricultural Bank of China, the Bank of China, China Construction Bank, China CITIC Bank and Guangzhou Rural Commercial Bank, to provide the line of credit.
The EV maker intends to use the credit facilities to support its business operations and expand its manufacturing, sales and services. Furthermore, the funding is expected to help the company boost the efficiency of its cash management, cost control and other corporate functions.
“Looking ahead, 2021 presents us with exciting opportunities. We believe the strategic collaboration with these leading financial institutions will enable us to further accelerate growth by building upon our core strengths,” said Xpeng CEO He Xiaopeng. “With our unwavering commitment to technology innovation and customer services, we look forward to bringing compelling EV experience tailored to our consumers.”
Xpeng has been ramping up its coffers in recent months. In December, the company raised about $2.5 billion by selling American depositary shares (ADS) at $45 a piece in what marked the first public follow-on offering since its initial public offering (IPO) in August 2020.
The fund raising comes as the Chinese EV maker is working on developing its international strategy following the launch of its first production model in Norway. As part of the global strategy, the EV maker is planning to roll out its second production model, the P7 electric sports sedan, in Europe within the next 12 months. The company delivered a total of 27,041 vehicles in 2020 and has a customer base of over 40,000.
XPEV, which began trading on the New York Stock Exchange after its $1.7 billion IPO at a price of $15 per ADS, closed at $44.36 on Jan. 11. (See XPEV stock analysis on TipRanks)
Citigroup analyst Jeff Chung on Jan. 4 reiterated a Buy rating on the stock with a $57.71 price target after the EV maker announced that its third model, an all-electric sedan, will be the world’s first smart electric vehicle to be equipped with lidar hardware. The model will launch later this year.
Chung is enthusiastic about the company’s partnership with lidar maker Livox, which he called “very positive.” The analyst believes that the partnership will help improve the XPILOT autonomous driving system’s safety features and enable it to detect remote obstacles much earlier while on highways and urban roads.
XPEV has picked up 6 Buys, 1 Hold, and 1 Sell which add up to a Moderate Buy analyst consensus. Meanwhile, the average price target stands at $46.35, implying 4.5% upside potential over the coming year.
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