Alibaba Cuts Stake In Chinese EV Giant XPeng, Citing Capital Management Goals

The U.S.-traded shares of XPeng Inc. XPEV experienced a notable decline on Friday, following Alibaba Group Holding Limited's BABA announcement to reduce its stake in the Chinese electric vehicle (EV) manufacturer. 

Alibaba's decision comes as it aims to reshape its investment strategy and capital management.

Alibaba, through its subsidiary Taobao China Holding Ltd., disclosed plans to decrease its stake in XPeng from 10.2% to 7.5%, equating to a sale of about 25 million American depositary receipts worth approximately $391 million, per a news report by Bloomberg.

Alibaba's spokesperson told Bloomberg that this move aligns with the company's capital management goals and is part of a strategy to monetize its investment. 

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"We have a strategic relationship with XPeng, which is one of China's leaders in electric vehicles. We believe in XPeng's prospects and look forward to continued cooperation with the company," the spokesperson told Bloomberg.

XPeng's Perspective

XPeng responded by emphasizing that Alibaba's decision is not indicative of a change in perspective about the EV maker's potential. 

The Guangzhou-based company noted that Alibaba would remain its second-largest shareholder following the reduction in stake.

The companies maintain their collaboration in various areas, including autonomous driving and in-car payment systems, leveraging Alibaba Cloud's technology and Alipay's payment platform.

Despite Alibaba's reduced involvement, XPeng continues to attract significant investments. Notably, Volkswagen AG VWAGY announced a $700 million investment in XPeng, intending to develop EVs in China jointly and secure a 4.99% stake in the company.

Price Action: XPEV shares closed lower by 7.54% to $14.47 on Friday. Shares were up 0.21% to $14.50 after hours.

BABA shares closed higher on Friday by 2.76% to $74.51. Shares were up 0.13% to $74.61 after hours.

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This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors

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