XPeng Denies Reports It Is Developing Batteries

Reports have surfaced that Chinese electric vehicle maker XPeng Motors recently started a self-developed batteries project led by Zhong Liang, a former senior battery engineer at BMW. Sources disclosed there are about 100 employees in the battery R&D team and that XPeng has engaged in extensive communication with the battery material supply chain. The initial implementation period of the project is about five years. The firm issued a response to the matter through domestic media on November 28, saying that it has no plans for battery self-research. XPeng says it is now firmly focused on the automobile business, controlling costs and improving operational efficiency.

The rumors are not totally groundless. On November 16, Guangzhou Pengbo Automotive Technology Co., Ltd. was established with a registered capital of 5 billion yuan ($695 million). The legal representative of the company is Henry Xia, one of the co-founders of XPeng, and battery manufacturing is in the scope of its business.

According to the equity information, the new firm is wholly owned by XPeng Power Battery (Hong Kong) Limited, so it is also regarded by the industry as a signal that XPeng will promote the self supply of batteries. However, some insiders at the company denied this to Cailian Press, claiming that they had only registered a new company. “This new company is a wholly-owned subsidiary of XPeng. There is no new business, but some already existing businesses may be carried by it in the future,” said one source.

It is nothing new for car companies to develop self-made batteries. William Li, CEO of EV maker NIO, announced at the beginning of the year that he had set up a battery team of 400 people, and planned to carry self-made batteries on the company’s new Alpine brand to be launched in 2024. From 2022 to 2024, it will take only three years to get ready.

SEE ALSO: NIO Invests $273M to Set Up Battery Tech Firm

Meanwhile, GAC Group, Great Wall Motor, Geely and many other Chinese car companies have drawn up plans to make their own batteries, even setting foot in the most upstream lithium mine sources. SVOLT, a battery company hatched by Great Wall Motor, is about to initiate an IPO, and GAC Group also announced in August this year that it will invest 10.9 billion yuan to build a battery manufacturing line.

Since the beginning of this year, the development of NEVs has been getting faster. However, the price of lithium products also rose. According to data from Shanghai Ganglian, the price of battery-use lithium carbonate rose recently, once approaching 600,000 yuan per ton. At the beginning of 2021, the price of lithium carbonate was still around 50,000 yuan per ton. The price increased about 12 times in more than one year.

The prices of raw materials have soared, and battery firms have transferred the resulting costs to car companies, which thus became the least profitable part of the industrial chain. In the third quarter of this year, apart from BYD, few automakers’ net profit growth rates exceeded that of battery companies and lithium mine companies.

According to the incomplete statistics of the Time Weekly, at least 75 investment deals have been announced in the field of power batteries in 2022, with a total investment exceeding one trillion yuan, nearly half of which have a scale of more than 10 billion yuan. Such a large-scale investment will bring about rapid changes in battery production capacity.