Chinese smart EV maker Xpeng sets up unit to design and produce battery packs with investment of US$717.5 million

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.

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.