Chinese smart electric vehicle (EV) builder Xpeng has taken a first step towards producing battery packs on its own after setting up a CNY5 billion subsidiary to be overseen by its Co-founder and President Henry Xia. Guangzhou Pengbo Automotive Technology will manufacture and sell EV batteries and is wholly-owned by Xpeng, one of China’s top three home-grown smart EV assemblers. “Batteries remain a primary concern for EV start-ups like Xpeng because a potential supply-chain constraint could prevent them from churning out enough vehicles for delivery,” said Qian Kang, a Zhejiang-based entrepreneur who owns car component businesses. “Amid rising demand for EVs it is advisable for them to strengthen their own battery manufacturing capabilities to ensure sufficient supply of the key component.”
Guangzhou-based Xpeng said that the unit would only make battery packs and that it would not make battery cells by itself. Battery packs involve the design and production of modules to house groups of cells, which connect with the drivetrain. The packs typically contain a temperature sensor and interconnectors used to connect each cell. Xia, 39, who earned a master’s degree in automotive engineering from Tsinghua University, will be the legal representative of the battery subsidiary.
Along with Shanghai-based Nio and Beijing-headquartered Li Auto, Xpeng is viewed as China’s best chance to take on U..S. carmaker Tesla in the world’s largest market for such vehicles. However, strained supply chains have severely disrupted production in Guangzhou since October. A broken logistics network during the Covid-19 pandemic also forced Xpeng to temporarily suspend work at its regional delivery centers, President Brian Gu said in November. A shortage of batteries to power its new G9 model, a premium sport-utility vehicle (SUV), was the main factor behind a sharp drop in deliveries in October and November, two sources with knowledge of Xpeng’s operations told the South China Morning Post.
