Chinese ride-hailing group Didi has curtailed its car-making ambitions with the sale of a business unit to electric-vehicle manufacturer Xpeng, as new entrants in the EV industry find it harder to gain production licences from Beijing.
Its smart EV business will be sold for HK$5.84bn ($744mn), the two companies said on Monday. The unit had been developing a car project known internally as Da Vinci, which involved taking a stake in heavily indebted state-backed automaker Guoji Zhijun and making cars at its plant in the south-eastern city of Ganzhou.
However, the project faced difficulties obtaining an EV production licence, as officials delayed and tightened approvals to address growing overcapacity in the industry. Chinese electric-car makers have cut back production, with the utilisation rate of Chinese EV factories as low as 30 per cent, Citi analysts estimated this month.