Shares of EV company Xpeng (XPEV) declined as public offering of 40 million shares was announced earlier today. The company plans to use the proceeds for research and development of Smart EVs, hardware and data technologies.
Today the company announced that it intends to offer and sell 40,000,000 American Depositary Shares (“ADSs”), each representing two Class A ordinary shares of the company, subject to market and other conditions, in an underwritten public offering. The underwriters will have a 30-day option to purchase up to an aggregate of 6,000,000 additional ADSs from the company.
The company expects to use the net proceeds from the proposed offering for:
- Research and development of its Smart EVs and software, hardware and data technologies,
- Sales and marketing and expansion of sales and service channels and super charging network, as well as the expansion of its footprints in the international markets
- Potential strategic investments in core technologies of Smart EV
- General corporate purposes, including working capital needs
Why Xpeng (XPEV) is still a good investment
In its Q3 press release, XPeng announced that it was building Guangzhou GET Investment Holdings for a Smart EV production base. By December 2022, the development of EV will begin.
This will provide XPeng with necessary facilities for research and development, construction, testing and sales of vehicles. It will also have an annual production capacity of 100,000 units since it owns a plant in Zhaoqing, in the province of Guangdong.
An investor could assume that if $293.1 million is produced from 8,578 deliveries, then $3.42 billion will be generated in revenues every year from 100,000 deliveries. XPeng is a long way from its full potential.
Investors are too short of rolling out annual profits in the band. In China and Tesla worldwide, XPeng has to deal with Nio. For instance, they started to export EV SUV to Europe, to be taken in charge on Sept. 24 through to the Xinsha Port in Guangzhou.
This year the United States granted XPeng a testing license for U.S. highways. If the initial U.S. exchange public service is a preliminary indication, EVs which commence to be exported to the region.
XPeng is still not broad enough for global expansion. The domestic market must first be dominated. And as the IPO’s cash income in investments will boost awareness for brands worldwide. From there, consumer demand has risen, with its sales rising as more EVs are sold worldwide.
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