/Chinese electric car start-up Xpeng gets $2 billion in credit
Chinese electric car start-up Xpeng gets $2 billion in credit

Chinese electric car start-up Xpeng gets $2 billion in credit

Xpeng CEO He Xiaopeng stands next to the company’s P7 electric sedan as he addresses media at the 2020 Beijing auto show.

Evelyn Cheng | CNBC

In July 2020, local branches for four of the “big five” banks extended 10.4 billion yuan in credit to Nio for the start-up’s China operations based in the city of Hefei near Shanghai. Participants in this deal included China Construction Bank, Industrial and Commercial Bank of China, Bank of China and Agricultural Bank of China, according to an announcement from Nio.

In China’s state-dominated system, the banks prefer to lend to state-owned enterprises. That makes it difficult for privately owned companies to get financing, unless they can convince the state-owned banks of their ability to repay loans.

Xpeng’s credit line announcement comes after the company raised more than $4 billion last year in its initial public offering on the New York Stock Exchange in August and a follow-on offering in December.

Shares have soared more than 195% since the IPO.

Where is the money going?