China’s Xpeng to take over smart EV division of ride-hailing giant Didi at $744 million

"Project 'MONA' will accelerate the Company's production and sales growth and help achieve greater economies of scale," Xpeng said in a statement.

The deal comes amid slowing demand and excess manufacturing capacity in China's EV industry that has made it hard for relative newcomers such as Didi to enter the market. Smartphone maker Xiaomi 1810.HK only recently won a regulatory nod to manufacture EVs - two years after first announcing such plans, sources have said.

Didi said it will support the launch by "providing access to its mobility market" and the two companies will explore strategic cooperation in a number of areas, including marketing, financial and insurance services.

Other possible areas of cooperation include charging, robotaxis and jointly developing an international market. Didi has been working with Chinese carmakers to develop robotaxis which it aims to put in service by 2025.

Didi will acquire around 3.25 percent of Xpeng shares under the deal, which could increase depending on whether production and sales targets are fulfilled. The likely maximum deal value of $744 million includes potential milestone payments.