XPeng Motors Establishes Battery Subsidiary

Chinese electric vehicle company XPeng Motors was reported on December 20 to have set up a power battery subsidiary last month, a move that is considered by the industry as another signal that the company will develop its own power battery manufacturing capabilities.

Guangzhou Pengyue Power Battery Co., Ltd. was established in November, and its legal representative is Henry Xia, one of the co-founders of XPeng Motors, according to Chinese business inquiry platform Qichacha. The new company has a registered capital of 5 billion yuan ($717.6 million), and its business scope includes battery manufacturing and spare parts production. Equity penetration information shows that the company is indirectly wholly owned by XPeng Power Battery (Hong Kong) Limited.

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XPeng Motors was previously reported to be developing its own batteries, but the company’s attitude has been rather low-key and cautious. On November 16 of this year, Guangzhou Pengbo Automotive Technology Co., Ltd. was established. The legal representative of the company is also Henry Xia, and its business scope includes auto parts and accessories manufacturing and battery manufacturing. Moreover, this company is also wholly owned by XPeng Power Battery (Hong Kong) Limited, so it is also regarded by the industry as a signal that the company will promote battery self-supply.

Besides, according to a report by 36Kr, XPeng Motors has recruited Zhong Liang, a former senior battery engineer at BMW, to take charge of the company’s self-developed batteries. Zhong has been the senior director of battery technology at XPeng Motors for more than half a year. In response, XPeng Motors replied that Zhong has been responsible for the firm’s cooperation with major battery factories for a long time.

At the end of November, in response to reports that XPeng Motors will develop batteries by itself, the firm replied to Jiemian News that it has no plans to develop its own batteries. The company is firmly focusing on the automobile business, aiming at controlling costs and improving operational efficiency.

For XPeng Motors, reducing costs and increasing efficiency is the most critical thing at present. Official data shows that it delivered a total of 5,811 vehicles in November, an increase of about 14% from the previous month. In the first 11 months of this year, a total of 109,465 vehicles were delivered, a year-on-year increase of about 33%. Its cumulative delivery volume is close to 250,000 vehicles.

With the rising cost of power batteries, self-developed batteries by automobile companies have become one of the ways to reduce costs. According to Zhu Huarong, chairman of Changan Automobile, the cost of power batteries accounts for over 40% of the cost of the whole vehicle, which seriously affects the development of product benefits and causes great fluctuations in business operations. Car companies including NIO, GAC Group, Great Wall Motor, Geely and others have started their own battery self-research projects.