Chinese EV Maker Xpeng Setting Up Third Plant to Meet Demand

(Bloomberg) — 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 company linked 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 the 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 record sales topped 1.3 million units last year. China’s new-energy vehicle sales could climb 54% in 2021 after growing 24% 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 start production by end of 2022. Each of these plants can make 100,000 units annually, implying Xpeng is looking to treble capacity.

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

Xpeng is also considering a secondary 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 $900 million more before its initial public offering.

XPeng’s U.S. traded shares rose 4% to close at $35.45 Thursday.

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