True EV Distribution Pty Ltd v Shenzhen Xiaopeng Motors Supply Chain Management Co Ltd [2026] FCA 380

Delivered ex tempore, Revised from transcript

1. This is an application for an interlocutory injunction by the first applicant (True EV) and the other two applicants against the respondents in terms of para 6 in the originating application as modified by the minute of proposed order provided by True EV as follows:
   1. Upon the applicants giving the usual undertaking as to damages, until final judgment in the proceeding or further order:
      1. The first and second respondents are restrained from appointing any person or entity in addition to the first applicant to distribute Contract Vehicles and/or Additional Contract Goods and/or provide Contract Services in Australia.
      2. The respondents are restrained from distributing Contract Vehicles or Additional Contract Goods or providing Contract Services in Australia other than through the first applicant or in accordance with clause 2.6 of the Distributor Agreement entered into by the parties on or around 14 May 2024.

Where:

1. "Additional Contract Goods" means XPeng Parts, XPeng Accessories and XPeng Merchandising.
   1. "Affiliate" means any entity, which directly or indirectly controls, is controlled by, or is under common control with another entity, where control means the power and ability to direct the management and policies of the controlled party through ownership of voting shares of the controlled entity or by contract or otherwise.
   2. "Contract Services" means all servicing an (sic) aftersales servicing, including pre-delivery servicing, maintenance, repair services (extended warranty programs and extended battery pack warranty included), workshop campaigns, and recall for Contract Vehicles.
   3. "Contract Vehicles" means motor vehicles with three of (sic) more wheels, meant to be used on public roads, sold within Australia under the XPeng Trademark.
   4. "XPeng Accessories" means new original parts, manufactured by the first and/or second respondent in the applicable product lists or circulars, as amended from time to time, and which do not replace a part which was originally installed in a Contract Vehicle.
   5. XPeng Merchandising" (sic) means Additional Contract Goods, not being XPeng Accessories or XPeng Parts, sold under a Trademark, which are dedicated as Additional Contract Goods by the first and/or second respondent in the applicable product lists or circulars, as amended from time to time.
   6. "XPeng Parts" means new, original replacement parts, including fluids (such as oil and coolants), relating to Contract Vehicles and Additional Contract Goods, as originally supplied within Australia by the first and/or second respondent, or with their consent, and which are dedicated as Additional Contract Goods by the first and/or second respondent in the applicable product lists or circulars, as amended from time to time.
   7. "XPeng Trademark (sic) means all trademarks, service marks, logotypes, commercial symbols, insignias, all and any trademark registrations and designs pertaining thereto, including, but not limited to, the trademark "XPENG" and the logotype associated therewith, owned by the first and/or second respondent or an Affiliate and that are associated and identified with the sale of Contract Vehicles.

1. True EV and the first and second respondents (XPeng) are parties to a distributor agreement dated 14 May 2024 (the Distributor Agreement), pursuant to which True EV was appointed as the exclusive distributor in Australia of XPeng vehicles and related goods for a period of at least five years with a prospect of further extension. On 1 January 2026, XPeng gave True EV a notice terminating its exclusivity as XPeng's authorised Australian distributor pursuant to Art 2.3 of the Distributor Agreement (the Notice). The notice said that "XPeng has formed the view that the sales and service network will function much better with XPeng Motors Australia Pty Limited [being the third respondent] also distributing XPeng vehicles". The Notice stated that it did not terminate True EV's right to distribute XPeng vehicles.
2. Art 2.3 of the Distributor Agreement provides as follows:

XPENG reserves the right to terminate the exclusive distribution authorization and/or appoint an additional XPeng Authorised Distributor in the event that DISTRIBUTOR does not fully accomplish the Network Planning and Commercial Distributor Target within two years from the date of this Agreement, DISTRIBUTOR fails to comply with its obligations under Article 17 of this Agreement and fails to remedy that breach following a period of reasonable notice given by Xpeng or in XPENG's view, acting reasonably, the functioning of the Sales and Service Network makes it necessary for XPENG to appoint an additional XPeng Authorised Distributor within the Territory. In which case XPENG will notify DISTRIBUTOR 3 months in advance. If XPENG appoints an additional XPeng Authorised Distributor within the Territory in accordance with this Clause 2.3, it will not be under an obligation to pay any compensation to DISTRIBUTOR.

1. True EV submits, and I accept, that unless restrained by this court, on and from 1 April 2026, XPeng will in all probability appoint the third respondent which will start acting as another XPeng authorised distributor in Australia.
2. True EV alleges that the Notice is invalid and should be set aside because Art 2.3 of the Distributor Agreement was not complied with, and also because XPeng has allegedly engaged in conduct in contravention of s 51ACB of the Competition and Consumer Act 2010 (Cth) (CC Act) by breaching cll 46A and 46B of the Franchising Code of Conduct (the Code), as set out in the Competition and Consumer (Industry Codes - Franchising) Regulation 2014 (Cth). True EV also alleges that XPeng has engaged in unconscionable conduct in contravention of s 21 of the Australian Consumer Law, being Sch 2 to the CC Act.

1. The first question is whether there is a serious question to be tried.
2. The Distributor Agreement contains provisions in Annexure 3 concerning annual orders targets which (according to the last sentence of cl 1.4.4 of Annexure 3) True EV was obliged to meet (that is the number of vehicles to be ordered by True EV from XPeng, not the number to be on- sold by True EV). There is an issue of construction as to whether True EV was obliged only to do its utmost to meet those targets by reference to the general provision in cl 5.2 of the Distributor Agreement. In 2024 and 2025, True EV only ordered and paid for less than a third of the obligatory orders targets (if the last sentence of cl 1.4.4 of Annexure 3 is treated as paramount to cl 5.2), although True EV contends that merely placing an order without payment was sufficient. It is not necessary to express a concluded view on those issues of construction.
3. In addition, the Distributor Agreement contains payment terms, which require a percentage to be paid within 15 business days after the sales contract is concluded and the balance to be paid by letter of credit or equivalent financial instrument or facility issued or confirmed at least 10 business days before shipment (Art 6.3). There were six shipments or proposed shipments of vehicles under contracts between True EV and XPeng from 1 August 2024 to 7 March 2025. There has been only one further contract for vehicles entered into by True EV and XPeng since then, namely on 5 February 2026 in relation to an order placed by True EV in October 2025, but True EV has not provided payment as required by the payment term in the Distributor Agreement. In the case of most shipments, True EV sought successfully to renegotiate the payment terms with XPeng. The material presently before me strongly suggests an inability on True EV's part to comply with the payment term in the Distributor Agreement, rather than merely an unwillingness to do so. In relation to several shipments, True EV obtained trade finance from a business called Helios, which has recently appointed receivers over the relevant assets of True EV, comprising some 197 vehicles.
4. On 1 April 2025, XPeng issued a notice of breach to True EV in relation to the annual order targets and various other matters. In that notice, XPeng proposed the termination of the Distributor Agreement and transition to a dealer model. On 11 April 2025, XPeng issued a further notice of breach concerning True EV selling vehicles through unauthorised dealers.
5. In the last week, True EV has received a letter of offer for a facility for a substantial amount of money at what strikes me as a high interest rate, and importantly is subject to satisfactory due diligence. In the absence of that condition precedent being satisfied, I do not place significant weight on that offer. As XPeng submits, the commercial reality is as follows:

(i) True EV has ordered relatively few vehicles and only a modest fraction of the order targets;

(ii) it has been largely unable to place and proceed with orders on the payment terms specified in the Distributor Agreement;

(iii) it has sought to deal with this by pressuring XPeng to process orders on payment terms requiring XPeng to bear payment risks not required of it under the contract;

(iv) True EV is now in receivership, apparently due to its lack of financial resources; and

(v) True EV has not proceeded with any order in over 12 months.

1. The result is that XPeng's brand and entry into the Australian market for electronic vehicles appears to be in a state of considerable dysfunction. There is no cogent basis to indicate that this state of affairs will change if True EV remains XPeng's exclusive distributor.
2. XPeng submits that the history of True EV's difficulty in making required payments stands in stark contrast to representations made by True EV before the Distributor Agreement was entered into concerning its financial resources and standing, and submits that the Distributor Agreement is the product of True EV's own misleading conduct. I do not place any significance on those representations or their alleged causative effect for present purposes. XPeng has not sought to avoid the Distributor Agreement for misrepresentation or misleading conduct, and indeed would appear to have affirmed it by the Notice. Similarly, I do not place any significance for present purposes on True EV's alleged non-disclosure of previous bankruptcies on the part of Mr Wakim, the founder of True EV.
3. Turning from those matters of background to the alleged contravention of s 51ACB of the CC Act by the alleged contravention of cll 46A and 46B of the Code, True EV contends that if the Notice is given effect to, the loss of True EVs exclusivity as XPeng's authorised distributor in Australia will constitute a material change to its rights under the Distributor Agreement, with the consequences that:

(a) there will be a deemed extension under cl 4 of the Code, which defines the word "extend" in relation to the scope of a franchise agreement to mean a material change to, among other things, the rights of a person under or in relation to the agreement;

(b) there will be a deemed new franchise agreement under cl 5 of the Code, because cl 5(2) says that the extension of the scope of a franchise agreement is taken to be a franchise agreement;

(c) the Distributor Agreement will terminate before it expires because XPeng has changed its distribution model within the meaning of cl 46A(1)(a)(iii); and

(d) XPeng will contravene cl 46A of the Code and s 51ACB of the CC Act because the Distributor Agreement does not provide for True EV to be compensated.

1. Further, if the Notice is given effect to, True EV alleges that it will not have a reasonable opportunity to make a return during the term of the Distributor Agreement without exclusivity as XPeng's Authorised Distributor in Australia, with the consequence that XPeng will contravene cl 46B of the Code and s 51ACB of the CC Act.
2. In relation to cl 46A, the argument hinges on whether the Notice brings about a material change in the rights of True EV under or in relation to the Distributor Agreement. It seems to me arguable that there is a change to the rights of True EV once the Notice takes effect, in that its distributorship will no longer be exclusive. In relation to cl 46B, True EVs argument also depends on the alleged lack of a reasonable opportunity for a return on True EVs investment. I have reservations on the current evidence that there is a serious question to be tried on that issue in circumstances where True EV will retain its rights of distributorship except for the right of exclusivity, but I will proceed on the basis that there is a serious question to be tried on that issue as well.
3. The remedies available for a contravention of s 51ACB include an interim injunction under s 80(2), but only pending the determination of an application for an injunction under s 80(1). No such application under s 80(1) has been made, but True EV foreshadows that it will seek to make such an application in the event that it succeeds at today's hearing in the grant of an interlocutory injunction. It is conceivable that an interlocutory injunction may fall within the kind of order to prevent or reduce loss or damage under s 87 of the CC Act, but, in the absence of any application for final injunctive relief, it is difficult to see how such an order would in substance be directed to preventing or reducing loss or damage, except for a relatively short period of time. However, as I have indicated, I will proceed on the basis that there is a serious question to be tried in relation to the contravention of cll 46A and 46B of the Code (and thus of s 51ACB of the CC Act), and I will also proceed on the basis there is a serious question to be tried as to the availability of injunctive relief in relation to such breaches.
4. As to whether Art 2.3 of the Distributor Agreement was complied with, True EV submits that there is no evidence that XPeng actually formed the state of mind required by Art 2.3, relevantly whether, in XPeng's view, "acting reasonably, the functioning of the Sales and Service Network makes it necessary for XPeng to appoint an additional XPeng Authorised Distributor within the Territory". As True EV submits, the Notice was not expressed in those terms. Rather, the Notice said that "XPeng has formed the view that the sales and service network will function much better with XPeng Motors Australia Pty Limited also distributing XPeng vehicles". However, on 7 January 2026, XPeng's solicitors wrote to True EV saying that XPeng had formed the view required by Art 2.3 (quoting it verbatim), and gave XPeng's substantive reasons for forming that view. I do not think there is a serious question to be tried as to whether XPeng actually formed that view. Whether the reasons held by XPeng were reasonable is put in issue by True EV. While I have some reservations as to whether the evidence raises a serious question to be tried on that issue, I will proceed on the basis that it does.
5. Accordingly, it is not necessary for me to decide whether there is also a serious question to be tried on the issues of a lack of good faith and unconscionability.

1. Turning then to the balance of convenience, the evidence of use by True EV indicates a realistic prospect of detriment to True EV in being able to develop its sales and service network, and distribute and service vehicles through that network, in the event that the Notice takes effect on 1 April 2026. The evidence indicates that True EV has already:

(a) lost two significant investment opportunities;

(b) had to abandon discussions and negotiations with potential dealers;

(c) suffered reputational harm with its existing dealer network; and

(d) lost credibility as an importer, distributor and franchisor.

1. While XPeng contends that True EV is conducting a loss-making business, I accept that there is some chance of True EV being able to improve its business performance and thereby recoup the very substantial investment it has made to date, and that that chance may be enhanced by a continuation of True EVs exclusivity. In sum, I am not in a position to be able to predict the future with confidence one way or the other in this regard, although nothing in True EVs track record to date suggests that eventual business success on its part, if it retains its exclusivity, is more likely than not to occur.
2. However, there is also a real and tangible detriment to XPeng if the interlocutory injunction is granted. The affidavit of Mr Takesue (the Chief Operating Officer of the third respondent) provides a cogent basis for an estimated loss of about $14.5 million if the third respondent is prevented from commencing operations on 1 April 2026, assuming a six month period to judgment after a final hearing. True EV estimates the trial will take five days, and XPeng estimates 15 days. As the matter has been allocated to my docket, and I am unable to hear a 5 to 15 day case until October 2026, XPeng's assumption of a six month delay is sound. As I understand True EV's position, it accepts that $14.5 million is within the range of reasonable views of what the undertaking as to damages might cost True EV, but if I have misunderstood True EV's position, then I make a finding in those terms. In light of True EV's financial position, it does not appear to have the wherewithal to honour its undertaking as to damages in that amount, and has not been able to provide satisfactory security for its undertaking as to damages. I note that True EV has proffered charges over its assets (although not first-ranking charges), but there is no evidence of value of the assets in question. In addition, True EV proffers directors' guarantees, but there is no evidence of the net assets of those directors.
3. In addition to the amount of $14.5 million, Mr Takesue identifies substantial non-quantifiable loss, including the risk of permanent dealer attrition to competing brands, longstanding damage to the XPeng brand in Australia attributable to True EV's management of the distributorship, and XPeng's inability to take advantage of a time-limited boost in the electronic vehicle market arising from the current oil crisis.
4. In addition to the question of the sufficiency of the undertaking as to damages, I am not persuaded that the assessment of damages would be unduly difficult in the present case if True EV succeeds at the final hearing. Evidence of sales made by the third respondent from 1 April 2026 will provide a very useful starting point for an analysis of how many additional sales True EV would likely have made if it had remained the exclusive distributor. No doubt, competing arguments would be made as to whether and to what extent those actual sales provide a reliable proxy for True EV's loss, but that is a matter well within the competence of appropriate experts.
5. There is also a real likelihood of ongoing disputation between the parties in the period between now and the final hearing of the proceedings, which would require significant ongoing supervision by the court and loss of executive time and energy for the parties from their normal business activities.
6. Finally, an oddity in the present case is that no final injunction is sought in the originating application. That feature casts real doubt on whether it would be appropriate to grant an interlocutory injunction. If True EV succeeds in seeking a declaration at the final hearing that the Notice is invalid or should be set aside, it will be open to XPeng to continue with the appointment of the third respondent as an Australian distributor at the risk of having to pay damages for breach of the Distributor Agreement or otherwise. True EV says that it proposes to amend its originating application to claim a final injunction, but only in circumstances where it obtains an interlocutory injunction today.
7. I do not regard the balance of convenience as favouring the grant of the interlocutory injunction sought, principally because of the insufficiency of the undertaking as to damages, and the conclusion expressed above that the assessment of damages would not be unduly difficult in the present case. Accordingly, the application for an interlocutory injunction should be refused.

I certify that the preceding twenty-six (26) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Jackman.