By Bingyan Wang

 

Shares of Chinese electric-vehicle maker Xpeng rose sharply toward an 11-month high after Volkswagen Group purchased a 4.99% stake in the company, following its "local electrification" strategy.

Hong Kong-listed XPeng shares advanced as much as 33% on Thursday morning, putting it on track for the highest close since August. ADRs closed at $19.46 in U.S. trading overnight, up 27%.

German automaker Volkswagen will take a 4.99% stake totaling $700 million in XPeng through the purchase of stock at $15 per ADS to build long-term strategic cooperation, Volkswagen said in a statement. The partnership includes a technological framework agreement that provides for the joint development of two VW-branded EVs for the midsize segment of the Chinese market, slated to be rolled out in early 2026.

Volkswagen plans to "swiftly tap into new customer and market segments, thereby systematically leveraging the potential of China's dynamically growing e-mobility market," it said.

The news fueled investor optimism over the Chinese EV market, sending Xpeng's rival Nio and Li Auto up 11% and 3.3%, respectively, in Hong Kong.

Despite Thursday's rally, Citi's analysts assign a high-risk rating to XPeng's U.S.-listed shares, saying the company is currently overvalued. They set the target price for Xpeng's U.S.-listed shares at US$6.28.

 

Write to Bingyan Wang at bingyan.wang@wsj.com

 

(END) Dow Jones Newswires

July 26, 2023 23:01 ET (03:01 GMT)

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