Chinese EV Maker XPeng Setting Up Third Plant to Meet Demand

XPeng Inc. is setting up its third production base in the city of Wuhan as the Chinese carmaker taps into surging demand in the world’s largest market for electric vehicles.

The U.S.-listed firm has tied up with the local provincial government to build a manufacturing base with annual capacity of 100,000 units, according to a statement Thursday. XPeng didn’t disclose a timeline for commencing production or proposed investment for the new plant, which will also house powertrain and research-and-development facilities.

“Smart EVs are booming in popularity in China,” Chairman He Xiaopeng said in the statement. “Expanding our capacity in key hubs like Wuhan plays a critical role.”

The new base, announced months after XPeng said it was building a similar-sized plant in Guangzhou, underscores the company’s bold bet on Chinese consumers’ burgeoning appetite for EVs after a record of more than 1.3 million units were sold last year. China’s new-energy vehicle sales could climb 54% in 2021 compared to 24% growth last year, Bloomberg Intelligence analysts wrote in a March 26 report.

XPeng, founded in 2014, has an operational facility in Zhaoqing in Guangdong province and announced its second plant in September in Guangzhou, which is likely to commence production by end of 2022. Each of these plants can make 100,000 units annually, implying XPeng is looking to treble capacity in the coming years.

Xpeng Tops Up Coffers With $77 Million Local Government Funding

The company delivered 13,340 units of its current two models in the first quarter, marking an increase of 487% over the same period last year as it recovered from the pandemic-induced sales slump.

Xpeng is also considering a second listing in Hong Kong as investor interest in cleaner cars soars. It raised $1.5 billion in August last year when it listed in the U.S. and another $900 million before its initial public offering.

©2021 Bloomberg L.P.

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