In 2020, Didi will launch a free Robotaxi service in some areas of Shanghai.

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Beijing – China Electric Vehicle Company Xpeng It said on Monday it would acquire Didi’s smart electric vehicle development business in a share exchange worth $744 million.

The Chinese ride-hailing company will become a strategic shareholder in Xpeng Motors, and the two companies are seeking to collaborate on marketing, financial and insurance services, charging, robotaxis and international expansion. This is according to information released by the two companies.

Xpeng shares were up more than 13% in Hong Kong trading as of Monday morning.

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Xpeng Motors said that with the strategic partnership and Didi’s new assets, the company plans to develop an electric car and launch it under a new mass-market brand next year, with a target price range of 150,000 yuan ($20,580).

Xpeng cars usually sell for around RMB 200,000 or more. The project name of this new brand is “MONA”, which is different from the brand of Xpeng Motors.

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The startup’s deal with Didi comes as many companies look for ways to get a piece of China’s growing but competitive electric vehicle market.

In late July, Xpeng Motors and the German auto giant Volkswagen Signed an agreement to develop two new electric vehicles for China under the Volkswagen brand, scheduled for launch in 2026.

According to the agreement, Volkswagen plans to invest approximately US$700 million in Xpeng Motors, holding a 4.99% stake.

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The deal is expected to be completed in stages, with Didi Chuxing getting a bigger stake if the new mass-market car brand does well on the expected total Holds a 3.25% stake in Xpeng Motors.

Under the agreement, Didi Chuxing is not allowed to sell its stake for two years after the deal is first completed.

The strategic cooperation agreement is valid for at least five years.

Didi itself has also tried to develop robotaxis and electric cars amid a setback in business over the past two years.

The ride-hailing giant was delisted from the New York Stock Exchange just months after it went public in 2021 and is subject to a now-concluded government investigation. Plans for the expected Hong Kong listing remain unclear, though the stock will still be traded over-the-counter.

— CNBC’s John Rosevear and Arjun Kharpal contributed to this report.

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