On Monday, Chinese electric car company Xpeng (9868. HK) said it will acquire ride-hailing giant Didi’s intelligent electric vehicle (EV) development unit in a deal worth as much as $744 million, and the two companies will form a strategic partnership. Xpeng’s shares surged around 13% in Monday’s trade.

The company said this partnership will allow Xpeng to further leverage Didi’s user base and resources as it develops its EV business. The two partners are set to explore cooperation in marketing, financial services, charging infrastructure, Robotaxi service, international market expansion, and more.

For Xpeng, this is the latest move in its quest to become a leader in the global EV market. Founded in 2015, Xpeng has built itself a reputation for its cutting-edge technology and features. Its founders have a strong background in tech, which in the current US and European auto markets could be an essential strength for anyone hoping to challenge established players like Tesla Inc (TSLA.O).

But despite its rapid rise, Xpeng still only accounts for less than 2.1% of the new-energy vehicle market in China. According to Reuters ‘ estimates, its main rival, BYD (BYD.HK), holds around 20% market share.

• RELATED STORY: China Launches New Measures to Support Markets

With the acquisition of Didi’s EV team, Xpeng will expand its presence in the mass-market segment with an A-class model launched next year under a new brand called MONA. The car is expected to be in the $20,000 price tier and can run over 500 miles on a single charge.

The MONA is a premium EV designed to be a step above the cheapest models available in China, such as the sub-$20,000 NIO ES8. A 50-kilowatt-per-hour liquid-cooled, high-performance battery powers its engine, and the car can achieve 150 kilometers per hour.

The partnership with Didi is a significant boost for Xpeng, which will help tap a wider pool of consumers and compete more effectively against its rivals in the mass-market segment. It will also give the company access to a nationwide shared mobility ecosystem.

The Xpeng-Didi deal is not the first time the two companies have worked together. In 2020, the two established a strategic alliance through Xpeng’s partnership with Didi’s Xiaoju Car Service, a subsidiary specializing in car rental and maintenance. In addition, the two companies collaborated on charging network integration and co-developed charging stations. Xpeng plans to issue class A shares representing 3.25 percent of its post-transaction share capital to acquire the assets related to Didi’s Smart EV project. This will make Didi a strategic shareholder of Xpeng. The transaction is expected to be completed by the end of 2022. The deal’s potential value is up to around $744 million, subject to various adjustments. The deal is subject to approval by the stock exchange. It is also subject to completing other conditions, such as fulfilling production and sales targets.