XPeng, a Chinese electric car giant, announced on Monday that it will acquire Didi’s EV subsidiary for over $740 million and launch a new brand of vehicles.

XPeng, founded in Guangdong in 2015, is one of many Chinese startups that have emerged in recent years to capitalize on the electric vehicle boom in the world’s largest auto market. Didi is China’s leading ride-hailing app and also operates a subsidiary that designs electric vehicles.

According to a filing with the Hong Kong Stock Exchange, where XPeng is listed, the car giant has reached an agreement with Didi to acquire its subsidiary for $744 million.

XPeng will also partner with Didi to launch a new brand of electric vehicles next year.

The deal was welcomed by markets, as it allows the Chinese manufacturer to eliminate a potential competitor and gain access to advanced technology.

XPeng shares rose nearly 13 percent on Monday morning. The brand, which also markets some of its products in Europe, employs around 14,400 people and has offices in Silicon Valley and Amsterdam.

In the first half of 2023, XPeng sold 41,435 vehicles, down 40 percent year-on-year.

China aims for the majority of car sales to be electric and hybrid by 2035 and generous purchase subsidies have fueled a boom in EVs in recent years, driven by firms such as BYD, Nio, XPeng and others.