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United States securities and exchange commission logo
August 3, 2022
Hsueh-Ching Lu
Vice President of Finance
XPENG INC.
No. 8 Songgang Road
Changxing Street Cencun
Tianhe District
Guangzhou, Guangdong 510640
People's Republic of China
Re: XPENG INC.
Form 20-F
Filed April 28,
2022
File No. 001-39466
Dear Mr. Lu:
We have reviewed your filing and have the following comments. In
some of our
comments, we may ask you to provide us with information so we may better
understand your
disclosure.
Please respond to these comments within ten business days by
providing the requested
information or advise us as soon as possible when you will respond. If
you do not believe our
comments apply to your facts and circumstances, please tell us why in
your response.
After reviewing your
response to these comments, we may have additional comments.
Form 20-F filed April 28, 2022
ITEM 3. KEY INFORMATION
Contractual Arrangements with the Group VIEs and Their Shareholders,
page 4
1. Please revise to
disclose prominently that you are not a Chinese operating company but a
Cayman Islands holding
company with operations conducted by your subsidiaries and
through contractual
arrangements with a variable interest entity (VIE) based in China and
that this structure
involves unique risks to investors. If true, disclose that these contracts
have not been tested in
court. Explain whether the VIE structure is used to provide
investors with exposure
to foreign investment in China-based companies where Chinese
law prohibits direct
foreign investment in the operating companies, and disclose that
investors may never
hold equity interests in the Chinese operating company. Your
Hsueh-Ching Lu
FirstName LastNameHsueh-Ching Lu
XPENG INC.
Comapany
August NameXPENG INC.
3, 2022
August
Page 2 3, 2022 Page 2
FirstName LastName
disclosure should acknowledge that Chinese regulatory authorities
could disallow this
structure, which would likely result in a material change in your
operations and/or a
material change in the value of your securities, including that it
could cause the value of
such securities to significantly decline or become worthless. Provide
a cross-reference to
your detailed discussion of risks facing the company and the offering
as a result of this
structure.
2. Revise to provide early in the section a diagram of the company s
corporate structure,
identifying the person or entity that owns the equity in each depicted
entity. Describe all
contracts and arrangements through which you claim to have economic
rights and exercise
control that results in consolidation of the VIE s operations and
financial results into your
financial statements. Identify clearly the entity in which investors
are purchasing their
interest and the entity(ies) in which the company s operations are
conducted. Describe the
relevant contractual agreements between the entities and how this type
of corporate
structure may affect investors and the value of their investment,
including how and why
the contractual arrangements may be less effective than direct
ownership and that the
company may incur substantial costs to enforce the terms of the
arrangements. Disclose
the uncertainties regarding the status of the rights of the Cayman
Islands holding company
with respect to its contractual arrangements with the VIE, its
founders and owners, and the
challenges the company may face enforcing these contractual agreements
due to legal
uncertainties and jurisdictional limits.
3. We note the Parent Company Only financial statements presented on
pages F-90 to F-94.
Please revise this section to provide in tabular form a condensed
consolidating schedule
that disaggregates the operations and depicts the financial position,
cash flows, and results
of operations as of the same dates and for the same periods for which
audited consolidated
financial statements are required. The schedule should present major
line items, such as
revenue and cost of goods/services, and subtotals and disaggregated
intercompany
amounts, such as separate line items for intercompany receivables and
investment in
subsidiary. The schedule should also disaggregate the parent company,
the VIEs and its
consolidated subsidiaries, the Wholly Foreign-Owned Enterprises, or
WFOEs, that are the
primary beneficiary of the VIEs, and an aggregation of other entities
Operations in China, page 5
4. Revise to provide prominent disclosure about the legal and operational
risks associated
with being based in or having the majority of the company s
operations in China. Your
disclosure should make clear whether these risks could result in a
material change in your
operations and/or the value of your securities or could significantly
limit or completely
hinder your ability to offer or continue to offer securities to
investors and cause the value
of such securities to significantly decline or be worthless. Your
disclosure should address
how recent statements and regulatory actions by China s government,
such as those
related to the use of variable interest entities and data security or
anti-monopoly concerns,
Hsueh-Ching Lu
FirstName LastNameHsueh-Ching Lu
XPENG INC.
Comapany
August NameXPENG INC.
3, 2022
August
Page 3 3, 2022 Page 3
FirstName LastName
have or may impact the company s ability to conduct its business,
accept foreign
investments, or list on a U.S. or other foreign exchange.
5. Revise to disclose prominently whether and how the Accelerating
Holding Foreign
Companies Accountable Act, and related regulations will affect your
company, including
the time frame change in PCAOB inspections for two consecutive years
instead of three
years.
Restrictions on Transfer of Funds, page 6
6. Revise to provide a clear description of how cash is transferred
through your organization.
Disclose your intentions to distribute earnings or settle amounts owed
under the VIE
agreements. Quantify any cash flows and transfers of other assets by
type that have
occurred between the holding company, its subsidiaries, and the
consolidated VIEs, and
direction of transfer. Quantify any dividends or distributions that a
subsidiary or
consolidated VIE have made to the holding company and which entity
made such transfer,
and their tax consequences. Similarly quantify dividends or
distributions made to U.S.
investors, the source, and their tax consequences. Your disclosure
should make clear if no
transfers, dividends, or distributions have been made to date.
Describe any restrictions on
foreign exchange and your ability to transfer cash between entities,
across borders, and to
U.S. investors. Describe any restrictions and limitations on your
ability to distribute
earnings from the company, including your subsidiaries and/or the
consolidated VIEs, to
the parent company and U.S. investors as well as the ability to settle
amounts owed under
the VIE agreements.
Item 3.D. Risk Factors, page 9
7. Revise your risk factors to acknowledge that if the PRC government
determines that the
contractual arrangements constituting part of the VIE structure do not
comply with PRC
regulations, or if these regulations change or are interpreted
differently in the future, your
securities may decline in value or become worthless if the
determinations, changes, or
interpretations result in your inability to assert contractual control
over the assets of your
PRC subsidiaries or the VIEs that conduct all or substantially all of
your operations.
8. We note your disclosure about the Holding Foreign Companies
Accountable Act. Please
expand your risk factors to disclose that the United States Senate has
passed the
Accelerating Holding Foreign Companies Accountable Act, which, if
enacted, would
decrease the number of non-inspection years from three years to
two years, and thus,
would reduce the time before your securities may be prohibited from
trading or delisted.
Update your disclosure to reflect that the Commission adopted rules to
implement the
HFCAA and that, pursuant to the HFCAA, the PCAOB has issued its report
notifying the
Commission of its determination that it is unable to inspect or
investigate completely
accounting firms headquartered in mainland China or Hong Kong.
Disclose whether you
have been or expect to be identified by the Commission under the HFCAA
and what
impact this may have on your ability to continue to offer your
securities.
Hsueh-Ching Lu
XPENG INC.
August 3, 2022
Page 4
9. Given the Chinese government s significant oversight and discretion
over the conduct of
your business, please revise to highlight separately the risk that the
Chinese government
may intervene or influence your operations at any time, which could
result in a material
change in your operations and/or the value of your securities. Also,
given recent
statements by the Chinese government indicating an intent to exert
more oversight and
control over offerings that are conducted overseas and/or foreign
investment in China-
based issuers, acknowledge the risk that any such action could
significantly limit or
completely hinder your ability to offer or continue to offer
securities to investors and
cause the value of such securities to significantly decline or be
worthless.
10. In light of recent events indicating greater oversight by the
Cyberspace Administration of
China (CAC) over data security, particularly for companies seeking to
list on a foreign
exchange, please revise your disclosure to explain how this oversight
impacts your
business and your offering and to what extent you believe that you are
compliant with the
regulations or policies that have been issued by the CAC to date.
We remind you that the company and its management are responsible for
the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action
or absence of
action by the staff.
You may contact Kevin Stertzel at (202) 551-3723 or Martin James at
(202) 551-3671 if
you have questions regarding these comments.
FirstName LastNameHsueh-Ching Lu Sincerely,
Comapany NameXPENG INC.
Division of
Corporation Finance
August 3, 2022 Page 4 Office of
Manufacturing
FirstName LastName