Didi Is in Talks to Buy A Third of China’s Electric Vehicle (EV) Maker Sinomach

According to two sources, Didi is in discussions with state-backed Sinomach Automobile to acquire a third of its electric-vehicle unit, indicating that the ride-hailing company’s regulatory troubles are behind it as it focuses on expansion.

Didi is in talks with state-backed Sinomach Automobile to purchase a third of its electric-vehicle subsidiary, according to two sources, indicating that the ride-hailing company’s regulatory issues are behind it as it concentrates on growth.

If approved, the transaction would represent a strategic move for Didi Global Inc. into the world’s largest EV market and demonstrate how regulators are relaxing their grip on the corporation.

Beijing’s scrutiny has compelled Didi to seek delisting from the New York Stock Exchange and to curtail its business, although there are hints of a thaw. The Wall Street Journal stated on Monday that investigators will soon end their inquiries into the corporation.

Didi plans to acquire minority shareholders’ stakes in the small automaker Sinomach Zhijun Automobile and invest new funds into the company, a source told Reuters. According to the second source, a stake of this size would cost Didi more than 1 billion yuan ($150 million).

According to insiders, negotiations for a stake in Sinomach Zhijun have reached an advanced level. One of them stated that the two parties have until the end of the month to finalize the deal, which will make Didi the second-largest stakeholder of the EV manufacturer behind Sinomach Automobile.

67 percent of Sinomac Zhijun is owned by the main company and its subsidiaries, according to the corporate register.

Didi has been secretly advancing a car-manufacturing project codenamed “Da Vinci” and, according to one of the sources, has approximately 2,000 employees working on it. According to insiders, it is eager to form a cooperation with an automaker that possesses an EV manufacturing license, which it needs to manufacture such vehicles in China.

Didi and Sinomach Zhijun did not answer our comment requests. Nor did Shanghai-listed Sinomach Automobile, whose shares increased by the daily maximum of 10 percent on Wednesday afternoon.

The sources, who have firsthand knowledge of the sale negotiations, declined to be identified due to restrictions on disclosure.

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