Chinese smart electric vehicle (EV) builder Xpeng has taken a first step towards producing battery packs on its own after setting up a 5 billion yuan (US$717.5 million) subsidiary to be overseen by its co-founder and president Henry Xia. The subsidiary, known as Guangzhou Pengbo Automotive Technology, will manufacture and sell EV batteries and is wholly-owned by Xpeng, one of the mainland’s top three home-grown smart EV assemblers, according to business and trademark registration tracking firm Tianyancha. “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 confirmed on Wednesday that it had established the battery unit but underlined 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. Xpeng eyes three new EVs in 2023 to make up ground lost to lockdowns Xia, 39, who earned a master’s degree in automotive engineering from Tsinghua University, will be the legal representative of the battery subsidiary, according to Tianyancha. Along with Shanghai-based Nio and Beijing-headquartered Li Auto, Xpeng is viewed as China’s best chance to take on US carmaker Tesla in the world’s largest market for such vehicles. However, strained supply chains caused by Beijing’s zero-Covid strategy have severely disrupted production in Guangzhou since October. A broken logistics network during the outbreak also forced Xpeng to temporarily suspend work at its regional delivery centres, company president Brian Gu said last month. 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 Post. Xpeng declined to comment on the matter. Deliveries of the G9, Xpeng’s fourth production model, started in October. Xpeng calls the flagship SUV “the world’s fastest-charging mass-produced EV,” stating that it only takes five minutes of ultra-fast charging for 200 kilometres of driving range. Nio, Li Auto and Xpeng see EV sales bounce back in November after Covid troubles Xpeng aims to launch three vehicles next year , as it ramps up development of new models to make up the ground lost to Covid-19 lockdowns this year. It will unveil an upgraded version of its bestselling P7 saloon, a mid-sized SUV and a minivan, or multipurpose vehicle, according to two separate sources with knowledge of its plans. The smart car builder released just one model, the G9 premium SUV, this year. Liu Jingyu, chairwoman and CEO of CALB, Xpeng’s battery supplier, said in an interview with the Post in October that it normally takes time and vast human resources to develop and make battery packs for new premium EVs because of the sophisticated technologies used in the cars. In May, Nio unveiled its plan to invest 218.5 million yuan to build lithium-ion battery labs and a pilot production line in Shanghai. It will build 31 research and development labs that focus on battery pack design and development in Anting, Shanghai’s northern Jiading district.