Alibaba to Further Reduce Holdings in Xpeng Motors

Chinese technology giant Alibaba Group Holding Limited (NYSE: BABA) has reduced its stake in XPeng Motors for the third time in several months. The multinational submitted a filing to the U.S. Securities and Exchange Commission (SEC) disclosing the sale of 33 million XPeng American Depository Shares (ADS) worth around $317 million through its subsidiary Taobao China Holding Limited.

Alibaba’s filing indicated it was selling XPeng ADS acquired in September 2019 as pre-IPO investments. XPeng had its U.S. initial public offering nearly a year later in August 2020 and raised $1.5 billion. CEO He Xiaopeng said the company would use the capital to fund research and development and expand its vehicle sales.

This isn’t the first time Alibaba has reduced its stake in the Guangzhou, Guangdong, electric vehicle manufacturer. In December 2023, the tech giant’s automotive arm sold 25 million XPeng shares worth approximately $391 million after XPeng registered a larger-than-expected loss and shipped fewer than 150,000 units through the year.

Alibaba offloaded 6.5% of its XPeng Class A ordinary shares several weeks before this announcement and had reduced its stake in XPeng from 12.49% to 9.24% by the end of the year. The most recent sale of XPeng ADS raised Alibaba approximately $317 million but caused Alibaba shares to fall by more than 3%.

Taobao China bought millions of XPeng shares in 2019 before the electric vehicle company went public. With XPeng setting itself up as a tech powerhouse to distinguish itself from the rest of the rapidly growing EV market, it seemed like a sure investment for Alibaba. The two companies teamed up to develop self-driving technology by leveraging Alibaba Cloud’s computing center.

However, the EV maker went through a rough patch in the third quarter of 2023 that caused its yearly deliveries to drop below 150,000, far behind competing Chinese automakers such as BYD. A spokesperson from Alibaba noted that the sale of XPeng shares was part of a company plan to streamline and manage its investments better. Even so, the spokesperson said Alibaba still believed in XPeng and looked forward to working with the EV maker in the future.

In the meantime, XPeng has also terminated an agreement it entered into with Taobao China and XPeng CEO He Xiaopeng that saw the executive commit to letting Taobao China nominate candidates from Alibaba Group Holding Limited at any time after the initial public offering. A “Termination of Agreements with Taobao China and Resignation of Non-Executive Director” announcement released on March 19, 2024, stated that the three parties had terminated the agreement.

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