Tesla challenger XPeng to Double its Manufacturing Capacity in China to Meet Growing Demand

author: Eric Walz   

The Xpeng G3i SUV is a more affordable alternative to Tesla's Model Y in China.

Chinese electric vehicle startup XPeng plans to double its manufacturing capacity as it takes on segment leader Tesla and others in the world's biggest auto market with its smart, connected vehicles.

Xpeng announced it has signed an agreement with the Zhaoqing Municipal Government and the Zhaoqing High Technology Industry Development Zone to build the Phase Two expansion project of the XPeng Zhaoqing Smart EV Manufacturing Base ("Zhaoqing Base") located in Guangdong Province.

The new plant will double Xpeng's annual vehicle production capacity from 100,000 to 200,000 electric vehicles. The expansion will position XPeng well in capturing the anticipated increasing consumer demand for its smart EVs.

The new factory will include stamping, welding, painting, final assembly and powertrain assembly, as well as R&D facilities. 

XPeng officially kicked off the Phase Two expansion project today at a signing ceremony co-hosted with the Zhaoqing Municipal Government and the Zhaoqing High Technology Industry Development Zone.

The expansion will help XPeng to meet growing demand for its smart EVs in China as it continues to post record sales.

XPeng reported its highest ever monthly deliveries of 8,040 electric vehicles last month. It represents a 228% increase year-over-year, and a 22% increase compared to June. It was Xpeng's second consecutive month of record-setting deliveries.

XPeng currently offers two electric models, the G3 SUV and the P7 Smart Sedan. The July deliveries included 6,054 P7s sedans and 1,986 G3s. 

XPeng's total deliveries for Q2 2021 were 17,398 electric vehicles, representing a 439% increase year-over-year. As of July 31, 2021, XPeng's year-to-date total deliveries reached 38,778 units, representing a 388% increase year-over-year.

The record-setting sales numbers last month topped the previous record high set in June when XPeng achieved its highest-ever monthly deliveries ever with 6,565 new vehicles delivered. 

The XPeng P7 Smart Sedan.

The rising sales are positioning XPeng as one of China leading EV startups as it looks to compete with Tesla, NIO Inc and other Chinese automakers in China's growing New Energy Vehicle (NEV) market, which includes fully-electric and hybrid vehicles.

XPeng's flagship P7 sedan is aimed at tech-savvy EV buyers in China. It offers the same level of advanced technology as Tesla's Model S, including autonomous driving capabilities, for a much lower price. 

The RWD Standard Range P7 starts at RMB 229,900 ($35,450) in China. While the Long Battery Life Tesla Model S starts at RMB 859,990 ($132,596) giving Xpeng a huge advantage in the market.

XPeng's P7 also offers an NEDC Range of 439 Miles, the longest range of all EVs sold in China. The car features an all-wheel-drive setup with dual electric motors.

Last month, XPeng unveiled a refreshed version of its first vehicle, the G3i SUV, which launched in 2019. Among the new features added were autonomous driving capability and self-parking. In total, XPeng said the G3i received 15 major firmware OTA upgrades since it first launched in Dec. 2018. As of March 31, XPeng said it added 55 new functions to the G3.

The refreshed G3i is also targeted at younger and more tech-savvy buyers as a more affordable alternative to Tesla's Model Y and Model 3. This group of buyers represents over 30% of new car buyers in China, According to IHS Markit. 

XPeng's market potential for the G3i is significant, as China is the world's biggest auto market. It's also exporting the G3i to Norway, a country with the world's highest EV adoption rate.  

XPeng says the G3i is equipped with the most powerful in-car operating system and the strongest autonomous driving assistance system in its class. Both the autonomous driving features and smart vehicle OS were developed entirely in-house by XPeng's R&D teams. Nearly half of XPeng's employees work in R&D developing new technologies for the automaker.

The G3i is priced from RMB149,800 (US$23,121) post subsidies. A fully equipped model with all the options costs RMB 185,800 (US$28,678) post subsidies. This is much less than what the Tesla Model Y costs in China. 

The least expensive rear-wheel drive Model Y costs RMB 276,000 (US$42,710), while the Long battery life, all-wheel-drive version costs RMB 347,900 (US$53,697) post subsidies. 

Like Tesla, XPeng's G3 and P7 are capable of receiving over the air software updates so they are always up to date with the latest software.

Deliveries of the refreshed G3i are expected to begin in September.

XPeng will also launch its third vehicle later this year called the P5. Last month, XPeng announced the post subsidy price range of RMB160,000 ($24,760) – RMB230,000 ($35,592) for its new P5 sedan. XPeng said the P5 is being positioned as a more family-friendly model than its flagship P7 sedan. 

XPeng unveiled the P5 in April at Auto Shanghai 2021. It will also compete with the Tesla Model 3 in China. Deliveries of the P5 are expected to begin by the end of the year.

The P5 will also come with lidar from the factory. Xpeng is the world's first automaker to add lidar to its vehicles during production. The lidar sensors will significantly improve the vehicle's high-precision object recognition for autonomous driving, according to the company.

The P5's double-prism lidar sensors are capable of identifying pedestrians, cyclists or scooters, static obstacles, and construction zones, even at night and in low-light conditions, such as when traveling in a tunnel.

"Introducing lidar technology into production vehicles is a breakthrough in popularizing autonomous driving, and an endorsement of our in-house R&D process. Our customers will benefit from this premium advanced technology, which makes autonomous driving more driver-friendly, safe and effective," said Xpeng Chairman He Xiaopeng during a presentation at Auto Guangzhou in Nov 2020.

XPeng was founded in 2014 and launched its U.S. IPO on Aug 27, 2020. It's one of three Chinese NEV startups to launch an IPO in the U.S., following the 2018 IPO of rival NIO Inc. and Li Auto in July 2020. 

Xpeng shares are listed on the New York Stock Exchange under the symbol "XPEV." The stock is up 3.3% on Wednesday to $39.28 following the announcement.

Eric Walz

Originally hailing from New Jersey, Eric is a automotive & technology reporter covering the high-tech industry here in Silicon Valley. He has over 15 years of automotive experience and a bachelors degree in computer science. These skills, combined with technical writing and news reporting, allows him to fully understand and identify new and innovative technologies in the auto industry and beyond. He has worked at Uber on self-driving cars and as a technical writer, helping people to understand and work with technology.