Because two factories are better than one.
Xpeng Motors has announced that they will begin building a second manufacturing plant, only months after the opening of its first factory in Zhaoqing. Besides this major announcement, the electric vehicle startup has been very busy of late, introducing a flying electric vehicle concept and listing on the New York Stock Exchange - and that's just in the past month.
The new manufacturing plant will be located in Guangzhou, not far from Xpeng Motor's corporate headquarters. To finance the new production facility, Xpeng now formed a cooperation agreement with the investment company Guangzhou GET Investment.
According to the terms of the cooperation agreement, Guangzhou GET Investment agrees to provide RMB 4 billion ($589,000,000 US) in financing to accelerate XPeng’s growth, as well as support the construction of a new factory in the Guangzhou Economic and Technological Development Zone.
The agreement also calls for Guangzhou GET Investment to invest RMB 1.3 billion ($191,000,00 US) directly into the construction of the plant. The factory will then be leased to Xpeng for seven years. Once the seven-year term is up, Xpeng will repay Guangzhou GET Investment the total costs it incurred and will take over ownership. There is a similar deal in place for the manufacturing equipment needed that amounts to approximately RMB 1.2 billion ($175,000,000 US).
“We are very excited to be selected as a key player in the Guangzhou Economic and Technological Development Zone,” said He Xiaopeng, Chairman and Chief Executive Officer of XPeng. “With the strong support from the Guangzhou government, we are confident we will execute on our strategic growth initiatives and deliver the highest quality products and services to meet our customers’ needs.”
Xpeng's Zhaoqing manufacturing plant has a maximum annual capacity of approximately 100,000 vehicles, yet Xpeng isn't selling nearly that many vehicles per year. In fact, the electric vehicle startup has sold less than 50,000 vehicles in total since it began selling its first offering, the G3 compact SUV in 2018. They obviously believe they will need much greater production capacity in the near future.
Customer deliveries of XPeng's second vehicle offering, the P7 long-range sports sedan just began a couple of months ago, and upgraded G3 has seen increased customer interest of late. Therefore, Xpeng should be increasing its total annual vehicles sold, however, they probably won't reach the 100,000 annual capacity of Zhaoqing before the new factory in Guangzhou comes online.
Is it just us or does it seem like Xpeng is coming out with major news nearly every month now? A lot has been happening for this startup from Guangzhou lately and they are still in the early startup years. The fact that they will soon have two of their own factories is pretty amazing when you consider that NIO, doesn't even have one yet.
NIO has sold more cars than Xpeng has at this point, but all of its cars are made under a joint venture at the Hefei manufacturing plant owned by JAC Motors, a state-owned automobile manufacturer in China.