Chinese electric vehicle (EV) startup Xpeng Motors has acquired a Guangdong-based vehicle manufacturer, Guangdong Foday Automobile, in a move to produce its own vehicles, local tech media 36Kr reported on Saturday.
The acquisition, the value of which was not disclosed, was completed by Xpeng’s investment subsidiary, Zhaoqing Xiaopeng New Energy Investment Co., Ltd, on March 19, according to Chinese enterprise data provider Tianyancha.
Foday Automobile, founded in 1988, produces complete vehicles including pickups and SUVs, as well as car bodies and auto parts. It has established long-term partnerships with many Chinese original equipment manufacturers (OEMs) including Foton Motor, Dongfeng Motor, and Great Wall Motor.
After acquiring Foday, Xpeng will obtain a manufacturing license for its EV models, allowing the startup to produce vehicles at its own facility, according to local media Beijing News, which was confirmed by the electric carmaker.
According to government regulations which took effect January 2019, auto companies are not allowed to build new battery-powered EV plants unless they have a minimum annual capacity of 100,000 units. This makes it difficult for Chinese EV makers to obtain a production license, leading many startups to outsource production or acquire licensed manufacturers as an alternative method.
Prior to the acquisition, Xpeng partnered with Haima Automobile, a FAW Group subsidiary, and manufactured its first production model G3 SUV in Haima’s facility in Zhengzhou, Henan. This partnership will not be affected by the new acquisition, a source closed to the matter told 36Kr.
Guangzhou-based Xpeng also announced a new manufacturing facility in Zhaoqing, Guangdong in 2017 with an investment of over RMB 10 billion. The new facility is expected to produce Xpeng’s second model, the P7 sedan, which will be delivered in the second quarter of this year.
Xpeng is not the only Chinese EV startup that has obtained a manufacturing license via acquisition. Baidu-backed WM Motor acquired Dalian Huanghai Automobile in 2017 to get a production license, while Byton acquired FAW subsidiary Huali Automobile in October 2018 by paying a symbolic sum of a single yuan and taking over the latter’s debt of RMB 850 million. CHJ Automotive, owner of EV startup Lixiang, also acquired Chongqing-based automaker Lifan Motors for RMB 650 million in December 2018.
36Kr is KrASIA’s parent company.