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China's Tesla Challenger Xpeng is Already Building a Second EV Factory to Support its Planned Growth

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【Summary】Chinese electric vehicle startup Xpeng Inc. announced on Thursday that it entered into a cooperation agreement with the City of Wuhan to build a new Smart EV factory. The EV factory will be Xpeng’s second production facility and will have an annual capacity of 100,000 vehicles, which will help Xpeng better compete with Tesla and other domestic rivals in the growing China EV market.

FutureCar Staff    Apr 09, 2021 12:00 PM PT
China's Tesla Challenger Xpeng is Already Building a Second EV Factory to Support its Planned Growth

Chinese electric vehicle startup Xpeng Inc. announced on Thursday that it entered into a cooperation agreement with the City of Wuhan to build a new Smart EV factory. The EV factory will be Xpeng's second production facility and will have an annual capacity of 100,000 vehicles, which will help Xpeng better compete in the China market.

The project is supported by the Wuhan government. 

Xpeng said the factory will cover a planned area of over 733,000 square meters and will include vehicle and powertrain manufacturing, as well as R&D facilities. The automaker did not disclose the amount of its investment in the new EV plant, or when construction work would start. 

Xpeng's first EV factory is located in Zhaoqing in China's southern Guangdong province. That plant has an annual capacity of 150,000 vehicles. Xpeng built its first EV the G3 sport-utility vehicles in 2018 using a contract manufacturer in central China, before opening its Zhaoqing factory.

Expanding into China's major auto manufacturing hub with strong local government support is an important part of XPeng's strategic development as the company looks to expand. Wuhan is a major hub for auto manufacturing in China like the Detroit area is in the U.S. 

The city is the capital of Hubei Province with a population of more than 11 million. The region has a well-developed auto supply chain and proximity to high-speed rail, highways and waterways for large ships.  

"Smart EVs are booming in popularity in China. We have a long-term strategic roadmap to embrace the sector's transformation. Expanding our capacity in key hubs like Wuhan plays a critical role," said Mr. He Xiaopeng, Chairman and CEO of XPeng at the signing ceremony in Wuhan this week. "Wuhan's strategic location as an auto manufacturing and distribution hub will further enhance our supply chain management, sales and distribution network in the future." 

Xpeng is one of China's "big three" EV startups along with Nio and Li Auto. All three companies are publicly traded companies in the U.S. Xpeng launched is U.S. IPO in Aug 2020. The EV startups have turned to Wall Street to take advantage of the strong investor interest in electric vehicle stocks that have made Tesla the world's most valuable automaker in 2020.

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The Xpeng P7 sedan is a strong rival to the Tesla Model S in China.

Xpeng could potentially rival Tesla in the China market, which is the world's biggest auto market. Like Tesla, Xpeng's P7 sedan is capable of autonomous driving and self-parking.

Xpeng followed up the G3 SUV with the P7 sedan in April 2020, which is a strong rival to Tesla's Model S and Model 3 in China. The P7 is also more competitively priced than Tesla vehicles. The P7 costs around half as much as a comparable Model S sedan.

As a way to promote its enhanced autonomous driving capabilities, Xpeng embarked last month on a 7-day road trip across China last month with a fleet of its P7 sedans driving in autonomous mode. The trip covered a distance of 3,675 km (2,283 miles) across six provinces in China. 

With strong backing from the government, China's new energy vehicle (NEV) market is growing. NEVs, which included fully electric and plug-in hybrid vehicles, sold over 1.3 million units in 2020, a record high.

Swiss bank UBS predicted that China's new-energy vehicle (NEV) sales would hit 6.6 million units in 2025, representing a six-fold from the 1.17 million vehicles delivered in 2020. NEVs include fully-electric and plug-in hybrid models.

Xpeng said its new Smart EV manufacturing base will support Wuhan's goal of transforming and modernizing the city's industrial facilities to power the auto industry of the future, which in China includes building more EVs.

Xpeng delivered 12,964 electric vehicles in the fourth quarter of 2020, representing an increase of 302.9% from 3,218 vehicles in the corresponding period of 2019 and an increase of 51.1% from 8,578 vehicles the company sold in the third quarter of 2020.


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